Malpractice premium rates lowered by two California insurers

Under a directive from the state insurance department, two medical malpractice insurers in California are lowering their rates.

The California Department of Insurance (CDI) announced on April 11 that malpractice rate rollbacks on policies offered by the Medical Protection Company (MedPro) and NCMIC Insurance Company will save doctors and other medical providers nearly $4 million annually in premiums.

The two companies join three other insurers — NORCAL Mutual, The Dentists Insurance Company and The Medical Insurance Exchange of California's physicians and surgeons program — whose rates were also recently lowered as a result of action taken by state Insurance Commissioner Dave Jones. Total savings to medical providers amounts to nearly $23 million, according to CDI.

MedPro, the fifth largest medical malpractice writer in California, will lower rates by 11.9 percent for its physicians and surgeons program. The reduction will save policyholders a little more than $3 million. NCMIC, which specializes in writing medical malpractice insurance for chiropractors, will reduce rates 7.25 percent, resulting in premium savings of slightly more than $500,000, the department reported.

MedPro will implement its rate reduction on June 1 and NCMIC on July 1.

The authority to regulate medical malpractice insurance rates comes from provisions of law put into place by Proposition 103 in 1988. The provisions include a mandate that insurers apply to the insurance commissioner for prior approval of rates and prohibit the use of excessive rates. Historically, this authority has been used to reduce medical malpractice rate increases and in some cases to require additional decreases in medical malpractice rates, according to CDI.

Last year Jones required the top six medical malpractice insurance companies in California to submit rate filings to CDI to justify their then-current rates. After review of those filings, Jones called for rate reductions. Five of the companies responded with “substantial” rate reductions, CDI reported.

"Unlike health insurance, where I do not have the authority to reject excessive rates, the insurance commissioner does have the authority to regulate the rates of medical malpractice insurance paid for by doctors, surgeons, clinics and other health providers," Jones said at the time of the filing requests. "We have found that recent loss ratios — the percentage of every premium dollar the insurer spends on claims — of many medical malpractice insurers are low, and that's why I have directed my staff to carefully examine the rates of medical malpractice insurers. Low loss ratios are one indication that premiums may be too high."

After requiring the insurers to submit rate filings, CDI evaluated and approved new rates that comply with state law.

The last of the six top medical malpractice insurance companies selling in California, The Doctors Company, is still under review by CDI.

Photo attributed to David Monniaux via Creative Commons license.