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Tort reform: insurance rates fall, recruitment up

Although it’s only been around two years, tort reform legislation is making a difference in the medical and insurance communities. Medical insurance liability rates are falling and physician recruitment and retention are much easier.

“Before tort reform, we really had no options. It was a sellers’ market,” said Steve Napier, owner of Southeast Insurance Agency in Hattiesburg. “Our medical clients were at the mercy of whatever we could bring to the table. They had no choice but to take non-standard policies.”

He said the price for liability coverage was not affordable and rates were double what they are now. “We’ve seen considerable decreases over the last two years. It’s stabilized,” he said. “As insurance agents, we’re very thankful that the Legislature passed tort reform. It kept us in business.”

The measure passed during the year Napier was president of the Independent Insurance Agents Association. He recalls that ob/gyn specialists and neurosurgeons bore the highest costs for coverage. “Many left the state and no doubt the reforms have helped keep some of them here,” he said. “Hospitals were in the same boat. Now we have many active markets for them, too.”

The Medical Assurance Company of Mississippi (MACM) is reducing its medical liability insurance rates across the board by 10% for 2007.

“We are very pleased to announce a rate reduction for our insureds for the second straight year,” said Michael D. Houpt, president and chief executive officer. “The favorable trends relative to losses and loss adjustment expenses that were evident in 2005 have continued through 2006. Therefore, our board of directors felt comfortable in making this decision.”

Gov. Haley Barbour is so pleased with the impact of the legislation that he made a tour of several medical facilities in the state to see and hear first hand its effects. Stops included the Imaging Center in Tupelo, Hattiesburg Clinic in Hattiesburg and the Medical Mall at St. Dominic-Jackson Memorial Hospital in Jackson.

Pete Smith, the governor’s spokesman, said the tour went well. “Each place we went they told stories of how excited they are to see tort reform working and bringing rates down,” he said. “They’ve seen their rates decrease and things are looking healthy for the medical and business communities.”
He said the success is seeing physicians staying in the state and some coming back who left.

“At the Hattiesburg Clinic, now they can get four top-ranked neurosurgeons to locate there. They and other facilities can recruit and get the best physicians,” he said. “It means better healthcare for everyone. Tort reform is working.”
According to Houpt, numerous claims that were filed in late 2002 to avoid provisions in the tort reform package have been favorably resolved during this year.

“We are finally disposing of large numbers of non-meritorious claims with little or no expense,” he said. “Combined with the other positive effects of tort and judicial reform, our financial results to date indicate that another rate reduction is justified, and I trust that our insureds will be pleased.”

In September 2005, MACM reduced renewal rates for 2006 by 5% and in December 2005, granted a retroactive refund of up to 15% on 2005 premiums.

Gov. Barbour issued a statement praising the action. “This across-the-board reduction in medical liability rates by the largest insurer of doctors in Mississippi is a significant and welcome decision that will have an immediate positive impact,” he said. “It is another concrete example of how tort reform is working to protect the quality and availability of healthcare by ending lawsuit abuse and leading to reduced medical liability rates in Mississippi. This is great news.”

Commissioner of Insurance George Dale also responded favorably to the news. “Mississippi continues to show insurance companies that recent reforms are working and do aid in providing and maintaining a fair and equitable marketplace,” he said. “I commend MACM for establishing a financial position that allows for this second consecutive rate reduction. Reforms were needed and now benefits such as this reduction are the result.”

MACM was founded in 1976 and is an organization of physicians and non-physician staff members dedicated to providing sound, stable insurance products and quality related services to healthcare providers practicing in the state.

Contact MBJ contributing Lynn Lofton at llofton656@aol.com.

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