New analysis indicates that the Feb. 4 decision by the Illinois Supreme Court overturning caps on non-economic damages awarded to medical malpractice claimants is likely to increase physician liability costs in the state by 18%.
The magnitude of the estimated increase is largely a reflection of the tort environment in Illinois,” said Chad C. Karls, principal and consulting actuary for Milliman, who specializes in medical professional liability coverage. “The overturn of a $500,000 cap on non-economic damages would have less impact in almost any other state. In Illinois, claim severities have been among the highest in the country. In addition, experience in other states suggests that the overturn of a cap like this can result in significant increases in the number of reported claims going forward. This would result in additional increases in costs for insurers.”
Indemnity claim severities will increase by approximately 23% and the average cost that insurers expend defending claims will increase by 10%.
See the full release here.
Karls has also written about retooling medical professional system. That analysis is available here.