TDI Denies Rate Increase Request by Med-Mal Provider

November 24, 2003

Texas Department of Insurance (TDI) Commissioner Jose Montemayor has rejected rate hikes requested by the Texas Medical Liability Insurance Underwriting Association, also known as the Joint Underwriting Association (JUA).

According to the Texas Department of Insurance, the JUA had filed for increases of 35.2 percent for physicians, surgeons, and other non-institutional health care providers, and 67.9 percent for hospitals and other institutional health care providers, to take effect Dec. 1, 2003.

Montemayor signed an order denying the request on Nov. 19.

“I am very troubled that any carrier of medical malpractice insurance would consider raising rates for Texas physicians,” Montemayor said. “This rate filing by the JUA flies in the face of sound data that demonstrates future rates should be dropping as a result of passage of Proposition 12. Additionally, with the state’s largest medical malpractice underwriter—Texas Medical Liability Trust—already agreeing to lower its rates, it seems illogical that any carrier would consider doing otherwise.”

In the order disallowing the rate hikes, Commissioner Montemayor noted that the proposed rates did not adequately consider the effects of House Bill 4 (Proposition 12) on the JUA’s future anticipated losses. He also stated that the proposed rates were unfairly discriminatory because they lacked actuarial support for territorial relativities.

Montemayor said TDI will aggressively scrutinize all rate requests and that the Department will take the same approach with medical malpractice rates as it took with homeowners insurance this past year. In September 2003, TDI ordered 29 home insurers to reduce their rates by a combined $510 million.

“Texas consumers expect that passage of Proposition 12 should bring rate relief to Texas physicians. Any future rate that comes before TDI should reflect these savings.”

TDI is currently examining the rates of all regulated medical malpractice carriers in Texas to determine if the effects of Proposition 12 have been accounted for in their premiums charged.

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