Now that malpractice insurance prices are falling again, let’s hope the temptation for physicians to go “bare” (without insurance) will decline as well. We can all agree there must be some remedy for patients who become seriously injured as a result of true medical negligence. Malpractice insurance accomplished this very well in the past when physicians could obtain adequate insurance coverage at affordable rates.

Since the early 1970’s, there have been three separate crisis periods when malpractice insurance rates increased dramatically to offset rising claim costs. This caused many physicians and malpractice insurance companies to “drop out” of the market and break their alliance all together. It is crucial to understand what has worked in the historic relationship between medicine and malpractice insurance to help to restore this alliance.

Since its inception, the purpose of medical malpractice insurance is to cover physicians or healthcare professionals against any claim for liability arising from the care and treatment of their patients. Before medical malpractice insurance was developed, the first public casualty insurance originated for train travel in the early 19th century in England. There were many train accidents back then that caused serious injuries to the passengers and led to general distrust of train travel. The first casualty insurance policy was created to compensate train travelers for losses resulting from train accidents. This compelled greater safety standards for train operation, bringing more travelers and increased profits for the industry. Because lawsuits were pursued to recover greater damages, this likewise caused much greater incentive for the industry to become as safe as possible.

Medical malpractice insurance was developed for similar reasons that casualty insurance for train travel became so successful. History well shows that the public trust with early physicians and the practice of medicine was sorely lacking. Before the American Medical Association (AMA) was founded in 1847, physicians in this country had no formal medical education or training. Early medical students were often illiterate and had little or no prerequisite education requirements to study medicine. Because of this poor public trust, the physicians’ ability to earn a satisfactory income was limited. Patients would often barter for the lowest medical fees because physicians lacked credibility to cure most ailments or could not relieve their suffering. Average life expectancy was only 47 years of age before the turn of the 20th century.

When the newly formed AMA established education and training standards, Harvard University developed the first three-year medical education curriculum in 1869. Johns Hopkins University significantly improved their curriculum by adding clinical practice training in 1876. Universities developing these medical programs were rewarded with large grants, while other schools that lacked similar training were closed. As doctors became more educated and standards of care improved, their ability to earn greater incomes advanced as well.

Before medical malpractice insurance, if a patient had a bad outcome following treatment the physician was often at risk of physical harm from a family member or friend of the patient. Physicians welcomed malpractice insurance for more than financial protection since their physical well being was also at stake. Since patients then had a source to recover damages caused by medical negligence, greater emphasis was be placed on standards of care for the patient. This greatly increased the public’s trust in the practice of medicine overall. Lawsuits against physicians, although NOT welcomed, would further ensure that standards of care for patients were not only met, but improved.

The earliest medical malpractice lawsuits, and arguably the first medical malpractice crises, began in the 1840’s. This period coincided with an explosion of medical advertising that exaggerated claims of medical cures. Lawyers began to realize the opportunity of holding physicians accountable for their patients’ health. In a recorded malpractice survey in 1878, Eugene Sander, M.D. from the state of Maine cited the growing anti-lawyer sentiment by stating that malpractice attorneys “follow us as the shark does the emigrant ship.” This sentiment was considered subtle for the times, but illustrates the early rivalry that existed between physicians and attorneys that continues to this day.

The advancement of medicine has served our society well until the practice of filing lawsuits and recovering large verdicts became an industry unto itself in the early 1970’s. The rules restricting lawyers from advertising were loosened in the 1970s, creating an explosion of direct marketing campaigns by lawyers about suing doctors. Now that we are recovering from our third crisis since then, physicians and insurance carriers must wonder if the insurance market will ever become stable again.

Rate competition in the market is good and this has already begun, but it is equally important for doctors to avoid purchasing rates that are artificially low from insurance companies that simply want to gain market share. These cut-rate carriers need immediate cash flow from premium dollars and have little concern for long term stability or protecting their physician policyholders. Simply put, even though doctors are suffering now with high malpractice rates, as these rates are lowered they need to closely monitor market conditions to make sure they are purchasing coverage from insurers charging realistic rates. Like during the late 1990’s, if a malpractice insurance policy rate sounds too cheap, it probably is and will only be offered until the claims trends reverse and the insurer pulls out of the market. Smart buying decisions are made by asking many more questions than just about price and will help stabilize the insurance market from quickly sliding into our next malpractice insurance crisis.

The few malpractice insurance carriers surviving the latest insurance crisis are now thriving because they provide the very best claim protection for their physicians. They survived the worst insurance storms experienced in Florida thus far, and they are also true advocates for their physician policyholders. The best insurance carriers all have very experienced claim management teams who hire only the very best “outside” legal defense teams. They do not search for the lowest attorney fees to cut defense costs. If a defense attorney is not performing to the highest standards, then you can be assured they are quickly replaced. Physicians receive many more benefits from established carriers such as Board of Medicine investigation defense, risk management, government lobbying, medical society sponsorships, and more.

A strong and stable alliance between medicine and malpractice insurance is crucial for the long term needs of both doctors and patients, just like liability insurance was so crucial to the growth of the English train systems and their passengers in the early 1800s. Even in these last few years in Florida when doctors witnessed many of their peers going bare, the vast majority of doctors have still chosen to remain insured for malpractice. Some of these insured doctors’ malpractice insurance rates have caused serious financial hardship for themselves and their practices, but most doctors realize that once they become uninsured there is no adequate recourse or remedy for curing those unfortunate situations that can result from even the best practice of medicine.