Medical malpractice market is healthy, state regulators say

Florida’s medical malpractice insurance market is healthy and is getting healthier, a new report issued by the Office of Insurance Regulation shows.

State regulators reported that carriers collected $559 million in premiums last year.

No company collected more in premium in Florida than First Professionals Insurance Co., which wrote $116.1 million in premium and had 20 percent of the market share in 2010. It was followed by MAG Mutual Insurance Co. which wrote $56.3 million in premium followed by The Doctors Co., an interinsurance exchange, which wrote $46.9 million and Florida Doctors Insurance Co. which wrote $37.5 million in premium.

The Doctors Co. earlier this year agreed to purchase FPIC Insurance Group for $362 million.

The healthy market for insurance carriers means premiums have dropped.

The report shows that that the average approved rate change in 2010 or physicians and surgeons — the largest segment of the medical malpractice insurance market — dropped 2.6 percent. When OIR includes rates from carriers that didn’t request any changes in 2010, the decrease in rates is reduced to 2.3 percent.

The OIR is required to issue the report as part of a 2003 major overhaul of the state’s medical malpractice laws, which limited the number of lawsuits that can be filed against providers for medical malpractice.

“Based on the trends found in this report, it would appear that the 2003 changes to the law have benefited policyholders and the industry, assisted with the solvency of medical malpractice carriers, and directly contributed to lowering the defense cost and containment ratios in the state,” the report states.

In an email, Florida Justice Association President Debra Henley says the report underscores her belief that the 2003 reform efforts were undertaken to improve insurance company profitability.

“The state’s own report on medical malpractice insurance shows that the industry’s efforts to make it harder for injured patients to recover for malpractice had little to do with reducing insurance rates for doctors and has everything to do with increasing the insurance company’s profit margin and bottom line,” she said.

In compiling the reports the office examined financial data for the 23 insurance companies that are responsible for writing 80 percent of the Florida market.  In 2009 there were 22 companies that wrote the majority of the market. The new carrier on the list is the domestic company, Steadfast.

OIR used information from the The National Association of Insurance Commissioners (NAIC) annual financial statement filings as well as the OIR-maintained medical malpractice closed claims database. State regulators also analyzed the rate filings submitted to its office in the last year when compiling the report.

Although rates slightly decreased for doctors the same did not hold true for other providers.

In fact, the report states that dentists saw a 4 percent increase in their rates in 2010 and that professional nurses rates increased 11.4 percent and podiatrists, optometrists, chiropractors, and similar professionals saw a 2.3 percent increase in rates in 2010.

State regulators processed 61 medical malpractice rate filings during 2010.  The report also shows that there were 2,520 claims reported as closed during 2010, down from 3,087 in 2009.  An estimated $766.6 million was paid over the lifetime of the claims closed in 2010.

The report also notes “there were no substantive measurable legislative changes” made to medical malpractice laws even though legislators passed a high profile bill pushed by the Florida Medical Association that requires doctors to be provisionally licensed in Florida to testify against another physician as well. Lawmakers also passed sovereign immunity measures for Jackson Memorial and Shands.

Florida is the fifth largest market in terms of direct premium written and  the state ranks eighth among the 10 most populous states when it comes to loss ratios, which is the amount of premium collected divided by reported losses. Losses includes both claims expenses as well as legal defense costs and taxes and fees, including agents and brokerage fees.

Florida had a 25.3 percent loss ratio, down 6.4 percent from the previous year and well below the national average of 32.9 percent. Loss ratios are comprised of claims costs as well as non-loss costs,or money spent on defense and cost containment, taxes and commissions.

The report shows that when compared to the other top 10 premium states in medical malpractice premium Florida ranks third–up from sixth, when it comes to legal fees. It ranks first when it comes to premiums paid on commission and the state ranks fourth in the amount of earned premiums paid for taxes, licenses and fees.

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