An analysis of the number of medical malpractice claims and their amounts

Starting from an extensive database, pooling 9 years of data from the top three insurance brokers in Italy, and containing 38125 reported claims due to alleged cases of medical mal- practice, we use an inhomogeneous Poisson process to model the number of medical mal- practice claims in Italy. The intensity of the process is allowed to vary over time, and it depends on a set of covariates, like the size of the hospital, the medical department and the complexity of the medical operations performed. We choose the combination medical department by hospital as the unit of analysis. Together with the number of claims, we also model the associated amounts paid by insurance companies, using a two-stage regression model. In particular, we use logistic regression for the probability that a claim is closed with a zero payment, whereas, conditionally on the fact that an amount is strictly positive, we make use of lognormal regression to model it as a function of several covariates. The model produces estimates and forecasts that are relevant to both insurance companies and hospi- tals, for quality assurance, service improvement and cost reduction.