Doctor malpractice insurance gets new player
BY BRUCE JAPSEN
http://www.chicagotribune.com
Competition in the state’s medical malpractice insurance market has intensified, with a Texas company the latest to launch professional medical liability coverage for Illinois physicians.
Medicus Insurance Co. of Austin said it has begun offering malpractice coverage for the state’s doctors, saying the climate to operate in Illinois has improved thanks to tort reforms approved by state lawmakers two years ago.
There are now at least a dozen companies providing medical malpractice insurance in Illinois.
That is more than double the number from two years ago.
“The reforms make a significant market difference,” said Sheldon Davidow, Medicus’ president.
To be sure, reforms in a variety of states helped Medicus attract $100 million in private-equity backing to launch coverage in Illinois and other states that have had tort reform or that recently passed reforms to medical liability.
“What we are looking to do is build a base of 12 to 15 states,” Davidow said.
For now, the market remains dominated by Chicago-based ISMIE Mutual Insurance Co., which controls about two-thirds of the physicians’ coverage in the state. ISMIE is an affiliate of the state’s doctor lobby, the Illinois State Medical Society, which has said it had more than 30 competitors five years ago.
In 2005 Gov. Rod Blagojevich signed a medical malpractice reform law, pushed by doctors, hospitals and insurers, aimed at lowering the high costs of professional medical liability insurance.
The law includes a cap on awards for pain and suffering at $500,000 for individual physicians and $1 million for hospitals.
However, the governor’s office said the law also included requirements that ISMIE and other carriers disclose more information about how they set their rates.
“Gov. Blagojevich’s intent of the medical malpractice reforms was to require companies to provide enough data that competing companies could judge risk,” said Susan Hofer, spokeswoman for the Illinois Department of Financial and Professional Regulation, which oversees the state division of insurance.
The improved climate earlier this year led ISMIE to add at least 400 new physician policyholders effective April 1, citing an improving climate for carriers since 2003, when it stopped accepting new business. ISMIE provides malpractice coverage for more than 13,000 doctors in the state.
ISMIE initiated the moratorium four years ago when the industry was experiencing myriad problems, including a bear stock market, overall health-care inflation and larger compensatory awards that threatened the surpluses of many medical malpractice companies.
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