By Timothy Darragh, BEST WIRE
https://news.ambest.com/newscontent.aspx?AltSrc=104&RefNum=248090
A proposed increase in rates for Medical Insurance Exchange of California has become a 7.2% decrease after intervention by the California Department of Insurance and Consumer Watchdog.
In November 2020, the member-owned medical liability company applied for an overall rate increase of 1.4%, according to a settlement stipulation with the department.
Consumer Watchdog petitioned for a hearing in early 2021, and the parties began sharing information regarding the application and the analysis behind it, it said.
During the negotiations, MIEC sought to withdraw its rate application and continue charging its current rates, saying legislation updating the malpractice damage cap under the state’s Medical Injury Compensation Reform Act would result in significant losses to the company, according to a statement from Consumer Watchdog.
Gov. Gavin Newsom in May signed the legislation raising the state’s cap on pain and suffering awards, the first change to the cap in 47 years (BestWire, May 24, 2022).
According to Consumer Watchdog, MIEC failed to provide any specific data or analysis supporting the claims of future losses, and the company’s own data showed a rate decrease was warranted.
Based on those discussions, the parties reached the agreement for an overall rate decrease of 7.2%, which applies for policies beginning or renewing Feb. 1, 2023, the stipulation said.
Additionally, the company agreed to pay special dividends to about 4,000 of its members, refunding 4.4% of premiums paid for policy years 2021 and 2022, it said.
The agreement will save policyholders $1.41 million, compared with what MIEC originally sought, and the refund will total $1.44 million, it said.
An attempt to obtain comment from MIEC was unsuccessful. The department did not comment further.
“Medical Insurance Exchange’s agreement to reduce its 2023 rates and refund additional premiums for 2021 and 2022 is further proof that Proposition 103’s insurance reforms, and not California’s malpractice damage cap, have held down medical malpractice and other insurance rates since the initiative passed in 1988,” Consumer Watchdog staff attorney Daniel L. Sternberg said in a statement.
Medical Insurance Exchange of California currently has a Best’s Financial Strength Rating of A- (Excellent).
The top five writers of medical professional liability in California, based on direct premiums written in 2021, are: Doctors Company Insurance Group, with 19.1% market share; Proassurance Group, 13.25%; Berkshire Hathaway Insurance Group, 10.05%; CNA Insurance Cos., 6.68%; and Coverys Cos., 4.84%, according to BestLink.