Medical professional liability rates appear to be going down in Texas

With data showing an improvement in loss costs in Texas, Medical Protective, an admitted medical professional liability insurer, said it would reduce malpractice premium rates for Texas physicians by 6 percent effective July 1, 2006. The company noted that this decrease is in addition to two other rate reductions it has made over the past year. Cumulatively, those previous reductions lowered premiums for Medical Protective’s physician policyholders in Texas by an average of 13 percent.

“Medical Protective made a commitment to Texas policyholders, legislators and regulators that we would closely monitor the impact of tort reforms passed in 2003. We are pleased that the emerging data continues to suggest a moderating trend in loss costs and that we are, therefore, in a position to reduce our Texas rates again,” said Timothy Kenesey, president and chief executive officer of Medical Protective.

Even though loss costs in Texas seem to be moderating, Kenesey reminded Texas health care providers to remain cautious. He said that even with the tort reform, health care providers in the state have reported thousands of claims against them since reform measures were passed.

Medical Protective was acquired by Berkshire Hathaway in 2005.

Declining rates
According to Jon Opelt, executive director of the Texas Alliance for Patient Access, “Texas doctors have received, on average, an 11.7 percent rate cut since the passage of Proposition 12,” the medical liability lawsuit reform bill enacted by the state legislature and approved by voters in 2003.

That figure, which Opelt said he received through an open records request to the Texas Department of Insurance, does not reflect a $10 million dividend being distributed to policyholders by Texas Medical Liability Trust (TMLT), the state’s largest medical liability insurance provider.

In September 2005, TMLT announced it would reduce medical liability rates for new policyholders by 5 percent across the board effective Jan. 1, 2006. Current TMLT policyholders will receive the rate decrease upon renewal of their policies. TMLT said the January 2006 rate cut is the third since Prop. 12 went into effect. In 2004 it lowered rates by 12 percent and in 2005 by 5 percent.

American Physicians Insurance Exchange, a physician-governed medical malpractice carrier, said it will reduce medical malpractice insurance premium rates an average of 13 percent for its insured physicians in Texas.

Announcing the rate decrease, the company attributed the cuts to “conservative underwriting and the Texas Legislature’s 2003 tort reform measures, which capped non-economic medical malpractice damages at $250,000.”

Through the end of 2006, as it stands now Texas doctors will have saved $143,790,000 on their premiums compared with 2004, Opelt said.

“The savings for 2006 alone is projected at $48.5 million. The remaining savings is compounded from year-to-year and takes into account Medical Protective’s rate hike in 2004,” he said.

More companies
Increasing competition may be a factor in the reduction in rates, as well.

According to Opelt since February 2003, some 30 new companies have begun writing physician liability coverage in Texas, accounting for about 4,400 policies. These new companies represent 13 percent of the commercial physician liability market written the state.

“The thirty companies include licensed carriers, risk purchasing and risk retention groups, as well as excess and surplus carriers,” Opelt said, adding that altogther the commercial market insures 75 percent of all licensed Texas physicians.