May 31, 2005

Trial lawyer advocates often repeat the silly assertion that medical malpractice premiums spiked in recent years because insurance companies had to recoup bad stock market investments. It's an argument refuted often enough before (here, here, and here (scroll to near end), for instance) but it's nice to see that the AMA has assembled a two-page memo (PDF) spelling out why it isn't so; in particular, it points out, regulators limit these insurance companies from keeping more than a minute share of their investments (<10 percent) in equities, and their investments in that sector have not underperformed the market generally.