Texas Med-Mal Insurer Plans Rate Hike

April 13, 2004

A large medical malpractice insurer plans to bypass Texas regulators in order to raise insurance rates for doctors, the Associated Press reported.

GE Medical Protective will increase the cost of premiums 10 percent on June 1 by switching from a rate-regulated line of insurance to one that doesn’t require state approval, according to the Houston Chronicle.

The carrier, which insures about 7,000 of the state’s 38,000 physicians, said it factored the future cost of claims into its decision. It said it would have had to drop coverage for some physicians if it had not made the switch.

GE Medical Protective switched to an unregulated product after state officials balked at its request to raise its rates by 19 percent.

The move is a setback for Texas Department of Insurance Commissioner Jose Montemayor and the supporters of Proposition 12, which sought to curb the soaring malpractice insurance costs by capping noneconomic damages in medical liability cases.

Voters narrowly approved the measure to amend the Texas Constitution in September.

The state insurance department estimated physicians could save between 8.5 percent and 11.5 percent on premiums if Proposition 12 passed. So far, however, only one of five major insurers in Texas has agreed to lower its rates.

Dr. Lou Goodman, chief executive of the Texas Medical Association, said he was disappointed that GE Medical Protective didn’t have more faith in the future results of Proposition 12.

But Jay Thompson, outside counsel for GE Medical Protective, said the carrier will need the increase even after accounting for Proposition 12 savings.

Not all policyholders will face 10 percent premium increases, he said. Doctors who have been free of claims, for example, may see smaller increases.

Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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