Should Medical Professional Liability Insurance be Experience Rated?

This article reexamines the evidence concerning experience rating of medical malpractice liability insurance. Using all claims against physicians closed with payment for four years in New York State, the study corroborates the statistical finding of previous research that within a medical specialty, physicians differ significantly in their risk of incurring claims. The article extends earlier research by examining the financial impact of experience rating based on Bayesian conditional means for physicians of low, median, and high risk within each specialty. The premium increases implied by the conditional means for experience rating would impose large penalties on physicians and create inequities in premiums across physicians with identical true risks. (March 1990)