Investment returns and size of damage caps impact rising cost of malpractice premiums.

Many observers of the malpractice insurance market disagree on the cause of the problem or the appropriate solution to increasing malpractice premiums. Some argue that increased frequency and soaring rewards are to blame, while others attribute rising premiums to insurance company’s losses on investments during the economic downturn. A number of laws have been introduced that attempt to stabilize premium prices, damage caps being the most well-known, but their effectiveness has been unclear.