Insurance:

Profitability of the Medical Malpractice and General Liability Lines

GGD-87-67: Published: Jul 13, 1987. Publicly Released: Jul 22, 1987.

Additional Materials:

Contact:

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a congressional request, GAO reviewed the property and casualty insurance industry's profitability, specifically medical malpractice and general liability insurance.

GAO found that: (1) although insurance underwriting losses have occurred over a 10-year period, the insurance industry has offset aggregate losses with investment gains; (2) underwriting losses resulted, in part, from the industry's cash-flow pricing strategy, which sacrificed underwriting gains to attract more business; (3) profitability estimates for medical malpractice and general liability depend on the adequacy of the reserves for future claim payments and whether those reserves are discounted to reflect their present value; and (4) the industry's reported rate of return on net worth was conservative because it based the rate on undiscounted reserves. GAO developed profitability estimates which show that, from 1975 through 1985, the: (1) medical malpractice line incurred losses when the reserves were valued at their full estimated payout, but was profitable when the reserves were discounted to present values; and (2) general liability line was profitable under all but one estimate, which assumed that the reserves were not discounted.

Jan 14, 2021

Nov 18, 2020

Nov 9, 2020

Oct 19, 2020

Sep 23, 2020

Aug 31, 2020

Jun 29, 2020

Jun 16, 2020

May 1, 2020

Apr 30, 2020

  • tax icon, source: Eyewire

    Priority Open Recommendations:

    Internal Revenue Service
    GAO-20-548PR: Published: Apr 23, 2020. Publicly Released: Apr 30, 2020.

Looking for more? Browse all our products here