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Articles
Aon study finds hospital professional and physician liability claims stabilizing
CHICAGO, October 23, 2006 - Insurance claims against doctors, nurses and other medical professionals have
stabilized for the first time in years, according to the seventh annual Aon Hospital Professional Liability and
Physician Liability Benchmark Analysis. While that is good news for the medical community, the bad news is that
the average size of malpractice claims continues to rise.
The study, which measured 47,735 claims representing more than $4.4 billion of incurred losses in the U.S., found
that the overall frequency of medical malpractice claims has not increased for the second straight year. While
claim frequency is stabilizing, according to the study, the average size (severity) of malpractice claims continues
to increase at a rate of six percent. However, the average amount paid to indemnify claimants is increasing at a
rate of only three percent, while amounts paid to defend against liability claims are growing at 17 percent as
hospitals invest in claims management.
he improved frequency rate that first emerged in the 2005 study appears to be sustained through 2006,said Greg
Larcher, director and actuary of Aon Risk Consultants and author of the analysis. ased on study findings, we
believe that the impact of past state level legislative reforms has largely been realized and we do not expect
significant decreases in claim frequency or severity resulting from tort reform in the future unless other states
pass legislation that withstands challenges. Patient safety initiatives being implemented today, however, may be
critical for sustaining a favorable frequency trend into the future.
This year study found that a statistically significant relationship exists between mortality and claim frequency in
certain segments of the database. For example, after adjusting for patient volume and acuity, Texas hospitals with
200 mortalities in 2004 experienced 6 indemnity claims while hospitals with 150 mortalities experienced 4 indemnity
claims. This finding gives an interesting perspective on how changes in quality might affect claim counts.
Added Larcher, hile it is logical to believe that organizations that reduce preventable harm to their patients will
also reduce professional liability claim counts and costs, our study takes a first step at proving this true with
data. In the long term, the industry would benefit from a more comprehensive measure of quality, beyond mortality,
that measures the success of patient safety improvements and their impact on liability costs.
More than 700 healthcare facilities provided loss and exposure data for the benchmark study. These participants
range from small community hospitals to large multi-state publicly traded healthcare systems. The study also
includes breakouts of claim costs and frequency trends by state and facility type, including university, specialty,
long term acute care and community.
The 2006 Hospital Professional Liability and Physician Liability Benchmark Analysis is co-sponsored by the American
Society for Healthcare Risk Management (ASHRM) of the American Hospital Association. To purchase a copy, please
dial +1.800.242.2626 and request item #178701. Visit www.aon.com/hpl_study for more information.
About Aon
Aon Corporation (www.aon.com) is a leading provider of risk management services, insurance and reinsurance
brokerage, human capital and management consulting, and specialty insurance underwriting. There are 47,000
employees working in Aon 500 offices in more than 120 countries. Backed by broad resources, industry knowledge and
technical expertise, Aon professionals help a wide range of clients develop effective risk management and workforce
productivity solutions.
About ASHRM
The American Society for Healthcare Risk Management (ASHRM) is a personal membership group of the American Hospital
Association with more than 5,000 members representing clinical care, insurance, law and other related professions.
ASHRM initiatives focus on developing and implementing safe and effective patient care practices, the preservation
of financial resources and the maintenance of safe working environments.
This press release contains certain statements related to future results, or states our intentions, beliefs and
expectations or predictions for the future which are forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain risks
and uncertainties that could cause actual results to differ materially from either historical or anticipated
results depending on a variety of factors. Potential factors that could impact results include: general economic
conditions in different countries in which we do business around the world, changes in global equity and fixed
income markets that could affect the return on invested assets, fluctuations in exchange and interest rates that
could influence revenue and expense, rating agency actions that could affect our ability to borrow funds, funding
of our various pension plans, changes in the competitive environment, changes in commercial property and casualty
markets and commercial premium rates that could impact revenues, changes in revenues and earnings due to the
elimination of contingent commissions, other uncertainties surrounding a new compensation model, the impact of
regulatory investigations brought by state attorneys general and state insurance regulators related to our
compensation arrangements with underwriters and related issues, the impact of class actions and individual
lawsuits including client class actions, securities class actions, derivative actions, and ERISA class actions,
the cost of resolution of other contingent liabilities and loss contingencies, and the difference in ultimate
paid claims in our underwriting companies from actuarial estimates. Further information concerning the Company
and its business, including factors that potentially could materially affect the Company financial results, is
contained in the Companys filings with the Securities and Exchange Commission.
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