Quote:
Originally Posted by Indy Coug
If I'm a liability insurer, I observe the range of possible claim amounts. In response to the claims distribution, I need to charge premiums sufficient to cover me if I get hit with particularly adverse claims experience.
When awards can reach the 8 figure level, that results in a siginificant amount of additional "risk premium" the insurer will charge its policyholders.
For example (and I'm just making up numbers for illustrative purposes), if the average malpractice claim cost per doctor per year is $100,000 but with a standard deviation of $600,000, you're going to see premiums well above $100,000 being charged.
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Sure, that's obvious, but that begs the question of what you mena by outrageous. What makes it outrageous? I assumed you meant unjustified. Do you mena anything large is outrgaeous regardless?