The Southern California Physician, May, 2002 |
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Compare What MICRA Saves You Members often ask, "What does my county medical society and the CMA do for me?" The accompanying table provides one answer very clearly. The continued efforts of SBCMS/CMA working with Legislators to preserve the provisions of MICRA prove their value in dollars saved each year for every California physician. MICRA (the Medical Injury Compensation Reform Act of 1975) passed as a result of the strong efforts of organized medicine. MICRA stabilized the malpractice situation in California. Before MICRA, malpractice rates were threatening to put most California doctors out of practice. In 1975, California led the nation in cost for malpractice insurance. Today, premiums for professional liability insurance are at or below the median for all states. Were it not for MICRA and the $250,000 cap on non-economic (pain and suffering) damages, San Bernardino and Riverside Counties' rates would look much like the others in the chart (see page S3). In case you need more compelling information about the
power of MICRA, CMA and NORCAL researched the following: Despite our ability to safeguard MICRA, there is an upheaval in the medical malpractice industry, locally and nationwide. All around the country physicians are experiencing huge rate increases, lack of available coverage or worse, denial of coverage because many large insurers have gone out of business or have stopped writing professional liability coverage altogether. Doctors in California are better off than most of their colleagues around the nation. In 2002, overall rate increases filed with the California Department of Insurance ranged from 2 to 8 percent, although some areas, such as San Bernardino and Riverside counties, saw increases averaging 18 percent. Compare that with up to 50 percent increases that physicians are seeing in other states. Medical malpractice rates are becoming a major issue throughout the country. Pennsylvania and West Virginia are truly in a state of crisis. In December 2001 St. Paul (2nd largest medical malpractice insurance company in the US) announced it was strengthening its reserves by $700 million and immediately quitting all of its medical malpractice insurance business. In February 2002 PHICO's (once Pennsylvania's largest Med Mal insurer) announced its liquidation that put physicians in these two states in a precarious situation. Closer to home, we are all aware about the crisis in Nevada. Physicians in our neighboring state are also facing skyrocketing malpractice insurance premiums in all the specialties. The surgical specialists were hit the hardest and physicians are leaving the state. Without MICRA, the same thing could happen in California. Oregon and Washington have also suffered the effects of a lack of tort reform. In 2001, some insurers priced themselves out of the Oregon market with midyear increases ranging from 50 to 125 percent. In December 2001, Washington Casualty Company ceased operations leaving 1,200 doctors without insurance. CNA, the second largest writer of professional liability in the country, filed an 80% increase in California for 2001 and began a withdrawal for California. MHU, the former physician-owned company in New Jersey which went public in 1998, delayed the release of its 2001 year-end financials and announced a massive restructuring due to underwriting losses. The company stock dropped over 70% in two days and their A.M. Best rating is under review. SCPIE has announced huge underwriting losses for 2001 and was downgraded by A.M. Best to a B++ rating. And, adding to the problem is investment performance, which affects surplus; it was disappointing for 2001. Further, re-insurers significantly increased premiums since September 11th. As a result of the above developments, increasing claims severity and loss costs, some insurers have imposed significant price increases and/or have begun a retrenchment in the marketplace. In short, liability coverage is becoming both more expensive and more difficult to obtain. A situation we have not seen in California for more than 10 years. The SBCMS sponsors the NORCAL Mutual Insurance Program for its members. For the 2002 policy year, NORCAL filed overall rate adjustments based on prior experience with the various classes and territories of insured. All of these efforts were directed to maintaining a strong financial position. Although NORCAL has always been thorough and selective in its underwriting, NORCAL has informed the SBCMS that in 2002, it will increase its efforts in both underwriting and risk management as they seek to lower their exposure to loss and improve the overall quality and profitability of their policyholder roster. NORCAL does plan to continue expanding through carefully controlled growth. This may mean having to decline some potential new business seeking coverage due to loss of an existing carrier or in an effort to find a better price. In short, any new business, which could adversely impact their ability to improve full and adequate coverage to their existing customer base will be carefully examined. NORCAL has indicated that its first priority will be to protect its current policyholders. Clearly MICRA has worked for California for more than 25 years. We are not faced with the specter of impossible rates or total withdrawal of the liability market being experienced in states like Florida, West Virginia, New York, etc. but we are monitoring the effects of what is happening elsewhere and how it impacts us in California. We also know the trial attorneys will be mounting an attack against MICRA in the very near future. In 2002, California term limits will result in significant turnover in the state legislature. It is extremely important that we convince our new legislators of the critical importance MICRA represents to California's health care providers and patients. Your continued support and membership in the San Bernardino
County Medical Society and the California Medical Association allows us
to continue to protect MICRA.
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