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Saturday, December 16th 2006

If William Buffet Jumped Off A Cliff, It Must Mean…

This is a year and a half old, but still pretty cool.

Overlawyered looks at the argument apparently going over on that blog about what exactly the world’s smartest investor knows about the medical malpractice insurance.

In July 2005 Berkshire Hathaway bought GE’s medical malpractice insurance division. A clear sign, apparently, to some of Overlawyered’s readers that the insuring physicians against malpractice claims is a wildly profitable endeavor and that there is thus no reason to cap jury awards.

But just weeks after Buffett’s purchase of GE Medical Protective, look at what his new company had to say about the Wisconsin Supreme Court decision striking down that state’s caps (via Overlawyered via Point of Law):

“We believe – as in the case of other states with significant tort reform measures that have been endorsed by constitutional amendments and/or high courts – that such predictability and relative stability in rates over time was due, among other key factors, to Wisconsin’s long-standing cap on non-economic damages.

“Decisions such as this recent one in Wisconsin and in many other states, prove once again that there is significant uncertainty in medical malpractice, and why so many carriers – who have not exercised the discipline necessary for long-term commitments – have failed in this volatile segment of insurance. In fact, it seems that a AAA-commitment to responsible, long-term data-driven rate making, together with forceful actions like Proposition 12 in Texas (where the voters decided by referendum to permit caps) are the best combination to, over the long-term, stabilize loss inflation and ensure a predictable, stable and fair market for health care providers and their patients.”

Pretty resounding condemnation.