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The chart kinda refutes what they're trying to get across in the article. I admit I know nothing about the insurance industry, but it seems like what the insurance company makes is more than what it pays out, but both are rising--it's not like the insurers are just jacking up prices for no reason. Of course they would raise their rates so they could manage to keep ABOVE the payout amounts, to pay for their overhead and make a profit (you make a product that costs A; you charge A+ so you won't be breaking even).

I freely admit I am probably out of my league here, but the article and the chart have me thinking "Yeah, and...?" The NYT seems to be saying that the insurers making money is the key to the problem: Once they're forced to make less, the costs will come down.

Yes and no...

While the article talks about national "trends", it is important to realize that there is a movement underfoot to limit damage awards...so saying that nationally the rate of premium increases is "slowing" may be due to the fact that a number of states have already enacted malpractice reform.

In my mind, from the insurers I've talked to, limiting awards for pain and suffering introduces more surety to insurance companies about potential payouts...and that makes the market more predictable. A more predictable market will in all likelihood bring back some previous malpractice providers that stopped writing coverage because the profit margins did not support the risk they were assuming with no cap to potential damages. An increase in malpractice writers WILL decrease rates for physicians simply by increasing the competition among the various carriers.

This will not however solve the entire problem, since insurance companies expect a certain return on their risk based assets, and if the investment markets still offer sub-par returns (which will be determined by the insurers), someone is going to pay to make up hte difference betweeen what they expect and what they receive on their investment of premiums.

Of course they would raise their rates so they could manage to keep ABOVE the payout amounts, to pay for their overhead and make a profit (you make a product that costs A; you charge A+ so you won't be breaking even).

You are exactly right. On top of that the chart shows payment for medical claims. Does that include cost of defense and other associated claims expenses? Secondly, liability claims are not like auto crashes where you can run down and get a repair estimate. It takes years and years for them to wind through the court system. Does this chart show what the insurance companies have reserved for pending claims? (Having said all that, I realize the answers may be in the article but I couldn't read it closely due to its gross inaccuracies.)