10 years later, ‘tort reform’ has dramatic impact on suits, payouts

[TexasTowelie]

4. Yes.

The TDI Property and Casualty Reports are at

http://www.tdi.texas.gov/reports/report4.html

The information that reported by the AAS in this story was from the Closed Claim Annual Reports.

Another interesting link on that page is the Quarterly Legislative Report on Market Conditions. If you scroll about 9-10 pages within those reports you will find an exhibit that provides cumulative totals by line of business. The medical professional numbers near the bottom of that summary exhibit provide the number of insurance groups and insurance companies that wrote medical professional insurance, direct written premiums, and direct losses paid. I will state that the amount of written premium has shown only slight declines over the time period; meanwhile, the amount of losses have declined significantly which supports your assertion that tort reform benefits the insurance industry. Therefore, the overall loss ratios are getting more favorable to insurers over the time period.

In 2003 the issues that prompted a review of tort reform laws were:

--rate shock on premiums
--a business climate that was unfavorable to medical providers to locate within the state
--withdrawal of primary care providers in rural areas and specialists in those areas, particularly obstetricians
--unavailability of insurance coverage because of the decreasing number of underwriters (when St. Paul Insurance Company stopped underwriting it left a big gap in the market)

I read a report a couple of years ago that indicated that more physicians are serving the Texas market due to tort reform, so the legislation did help in that regard--I don't have a link to that report though. However, I also know that some counties no longer have primary care physicians (Live Oak and Duval are the two largest counties according a report I read in the Texas Tribune).

Ironically, the number of insurance companies that are underwriting policies has decreased. The following data is from the 4th quarter of each year of the quarterly market reports:

Year |#Groups/#Companies |Direct Written Premium |Direct Losses Paid |Ratio*
1996 | 38/58 |$274M |$215M |78.5%
1997 | 45/66 |$287M |$176M |61.3%
1998 | 39/59 |$314M |$244M |77.7%
1999 | 38/58 |$299M |$278M |93.0%
2000 | 38/65 |$302M |$381M |126.1%
2001 | 33/50 |$378M |$320M |84.7%
2002 | 36/51 |$485M |$302M |62.3%
2003 | 36/46 |$551M |$251M |45.6%
2004 | 34/42 |$444M |$228M |51.4%
2005 | 32/40 |$429M |$157M |36.6%
2006 | 32/40 |$362M |$111M |30.7%
2007 | 32/40 |$266M |$ 84M |31.6%
2008 | 33/40 |$242M |$ 97M |40.1%
2009 | 33/43 |$222M |$ 82M |36.9%
2010 | 28/40 |$236M |$ 66M |28.0%
2011 | 29/40 |$230M |$ 58M |25.2%
2012 | 27/40 |$247M |$ 47M |19.0%

* The loss ratio here does not actually indicate the actual loss ratio for the year; however, I made the calculations to show the downward trend over time. Most insurers consider the 60%-65% mark on loss ratio as the point of profitability after including overhead and other loss adjustment expenses (defense council, claim adjusters, etc.)