R.I. DELAYS LEAD PAINT RULES:
The Rhode Island General Assembly recessed on June 26, after approving dozens of bills that included health insurance reforms, a delay in lead paint mandates for landlords and development of a new capital city hotel. Lawmakers won't be away long, however. Gov. Don Carcieri has promised at least three vetoes—on the $5.9 billion state budget, a casino bill and the new hotel—that would bring the legislature back into session for override votes. Both chambers approved increased state oversight of Blue Cross & Blue Shield of Rhode Island, which was criticized earlier this year for poor management. Lawmakers have also approved creating a state health-insurance commissioner. A one-year delay in implementing lead paint mandates, until July 1, 2005, was approved, to give owners of old housing units more time to prepare. The legislation, approved two years ago, covers apartments and housing units built before 1978. When property is transferred, landlords would be required to conduct inspections and meet a timetable for cleaning up hazards.
R.I. ADOPTS FLEX-RATING:
Rhode Island has relaxed its regulation of personal lines insurance rates. The House and Senate approved a flex-rating measure allowing insurers to increase or decrease rates by no more than 5 percent within a one-year period without prior approval of the state. The measure (HB 8042) took effect immediately. Rate changes higher or lower than 5 percent would still be subject to prior state approval by the Department of Business Regulation. State Rep. Brian Patrick Kennedy, chairman of the House Corporations Committee, sponsored the bill. Kennedy is also chairman of the executive committee for the National Conference of Insurance Legislators (NCOIL), whose flex-rating model served as the basis for the Rhode Island measure, although that proposal calls for a flexible range of up to 14 percent.
MASS. TO HEAR HIGH RISK AUTO PLAN:
Massachusetts Insurance Commissioner Julianne Bowler has scheduled a public hearing for July 22 to hear testimony on proposed rule changes to the state's high risk auto facility. Commonwealth Auto Reinsurers (CAR), the current high risk organization, at Bowler's urging, in order to convert to an assigned risk type operation, approved the changes. But Bowler must approve them before they go into effect. Her decision to hold a public hearing signaled that she would not adopt the rule changes as emergency regulations that go into effect immediately. Some of the proposed changes had July 1 effective dates. However, it does not preclude her deciding after a public hearing to implement rules retroactively under state law, according to the Division of Insurance. Most, but not all, within the state's insurance industry support the move to an assigned risk plan. Chief among the opponents is Commerce Insurance Co., the state's largest writer of private passenger auto coverage. Commerce exercised its right to request a public hearing and has cited what it believes are legal problems with the conversion plan. In related news, the Fireman's Fund Insurance Companies gave notice to Massachusetts officials that it intends to withdraw from the state's personal automobile insurance market on Dec. 31, 2004, but if the insurance reform package is enacted, it will rescind its withdrawal action "Fireman's Fund would prefer to continue serving the personal auto insurance needs of consumers in Massachusetts" said Cynthia Tidwell, president of personal insurance for Fireman's Fund. "However, given the current environment, we have no choice but to issue a notice of our intent to withdraw from personal auto insurance in Massachusetts. Fireman's Fund cannot achieve necessary financial targets within the rules of the existing state personal lines auto program." The company said it could not wait any longer to make a decision because regulatory deadlines require companies to give notice to CAR six months in advance of actual withdrawal. Fireman's Fund, while not a major player in the state's auto market, is one of only 19 writers. Fireman's Fund currently writes about 22,000 auto customers in Massachusetts, representing less than 1 percent of the state's auto market.
N.Y. FAIR PLAN BACK IN BUSINESS:
After nearly nine weeks of being suspended, operations at the New York property insurance residual market are back. The suspension of the New York Property Insurance Underwriting Association, also known as the Fair Plan, left thousands of home and business property owners without a market. It was due to legislative disputes and inaction on reauthorization legislation. But finally on June 22, both houses of the state legislature approved extending the plan's authority until June 30, 2005. The Independent Insurance Agents & Brokers of New York Inc. commended Gov. George Pataki for quickly signing the legislation. During the suspension, the program lacked authority to issue new and renewal policies, and non-renewal notices were sent to policyholders whose coverage expires after June 30. NYPIUA will now offer renewals to policyholders who received non-renewal notices, and they will have extended time periods for paying the required premium and not suffer lapses of coverage if they pay on time. The program is also accepting applications and payments on its Web site at www.nypiua.com. The bill signed by Pataki is also retroactive to April 30, when NYPIUA's authorization sunset. The 59-day suspension of operations is three days longer than in 2003. According to IIABNY, the market disruption caused by the legislature's failure to renew authorization was avoidable and frustrates the organization's 1,900 member agencies and brokerages. "New Yorkers should know their legislature's fix to this problem is at best a stop-gap solution," said Kathy Weinheimer, IIABNY senior vice president of industry relations and education. "Our hope is NYPIUA will no longer be used as a political football or bargaining chip as it has in past years. Lawmakers, by not passing legislation to permanently extend authorization, face again the prospect of kicking around NYPIUA this same time next year or even later. It is a game that should end now." IIABNY reiterated its calls for permanent NYPIUA reauthorization and urged the Senate and Assembly leaders to pledge to move the issue among their priorities in the 2005 session.
N.Y. MED-MAL RATES UP 7%:
New York Superintendent of Insurance Gregory V. Serio announced that the majority of New York State's 50,000 physicians will see a 7 percent rate increase in their medical malpractice insurance premiums for the policy year beginning July 1. Serio rejected recommendations from insurers that rates be increased as high as 25.7 percent. "Considering that health care costs are impacted by medical malpractice rates, our efforts to stabilize rates are going a long way to control health care expenses for New Yorkers," Serio commented. For the new policy year, the department has established a 7 percent increase for all insurers other than the Medical Malpractice Insurance Plan (MMIP). MMIP, which covers approximately 500 physicians unable to obtain insurance coverage from other carriers, will receive a rate increase of 20 percent. The major medical malpractice insurers doing business in New York, and their approximate market share are: Medical Liability Mutual Insurance Company (53 percent), Physicians Reciprocal Insurers (30 percent), HANYS Insurance Company (4 percent) and Academic Health Professionals (4 percent). Legislation was enacted in 1986 giving the superintendent the authority to establish stabilized malpractice rates for doctors in order to moderate medical malpractice rate increases. The average medical malpractice rate changes for physicians during the past five years have included an 8.5 percent increase in 2003 and no increase in 1999. In addition, the department will soon set rates for the excess medical malpractice coverage.
MD. GOV. URGES MED-MAL ACTION:
Maryland Gov. Robert Ehrlich called on the legislature to pass a medical malpractice reform bill after the state's largest medical malpractice insurer filed for a 41 percent rate increase in malpractice insurance rates. The governor said Medical Mutual's planned increase will "push the issue over the threshold." Ehrlich told reporters the General Assembly should hold a special session to deal with the crisis, but added that he's not interested in wasting time. "The General Assembly could pass a bill in one day if they can get together beforehand," he said. "This is about the ability of a pregnant woman to have confidence that her OB will be in practice next year," Ehrlich said. "This is about real people." The concept of risk pool makes some sense, Ehrlich said. "How we fund it is the devil in the details." But, he said, sending the bill to taxpayers is not an option. Medical Mutual raised its rates 28 percent last year, but warned that it might raise rates again this year if the trends didn't change. The actual impact of the proposed increase on doctors will be greater because the physician-owned Medical Mutual is proposing to drop the usual dividend it pays. The dividend last year reduced premiums by 14 percent. The proposed rates are subject to review by the Maryland Insurance Administration, a process likely to take a few months. Insurance Commissioner Alfred W. Redmer Jr. said he wants to use outside experts to review the numbers and to conduct a public hearing.
PA. REJECTS MED-MAL CAPS:
The Pennsylvania Legislature declined to advance a measure that would allow limits on the dollar amount juries can award for pain and suffering in medical malpractice claims. The House voted 107-93 against an attempt to force the chamber's Judiciary Committee to release the resolution on the so-called pain-and-suffering "caps." Hours earlier, the Senate's Judiciary Committee voted 10-4 against moving the resolution to the full Senate floor. "It's safe to say that for this year, unfortunately, the issue of caps is dead," said Sen. Jake Corman (R-Centre), a leading proponent of the resolution. Physicians who say that out-of-control jury awards have made Pennsylvania a hostile place to practice have advocated the measure, which would amend the state Constitution. Some lawmakers, however, question claims that doctors are leaving the state. Proponents, including many Republicans, framed the measure as a way to stabilize the state's rising insurance rates for med-mal. Opponents—mostly Democrats, victims' advocates and trial lawyers—contend that the measure would unfairly curtail the rights of victims of medical mistakes, and say med-mal insurance rates are not rising because of jury awards. They say changes in law governing insurance companies and tighter controls on the filing of civil lawsuits, not limits on damages, would better stabilize the rates physicians must pay for insurance. In the past four months, the House and Senate have each passed a resolution on the subject, but neither chamber has been able to pass the other's resolution because of what Corman and other proponents say is opposition in committees. To amend the state Constitution, both the House and Senate must pass the measure in two consecutive two-year sessions and then voters in a statewide referendum must approve it. Because of constitutional provisions, the deadline to pass the measure in this two-year session is early August, 90 days before the Nov. 2 general election.
N.J. FINES DRIVERS ON CELL PHONES:
New Jersey's ban on cell phone use by drivers went into full effect on July 1, but police still can't pull somebody over simply for chattering away while going down the road. Motorists talking on hand-held cell phones while behind the wheel could be fined up to $250, but only if they are stopped for another driving infraction. That has some questioning the effectiveness of the law. State officials said the measure is intended as a starting point for getting drivers to eliminate a potentially deadly distraction. "It's a human behavior issue,'" said Roberto Rodriguez, of the state Division of Highway Traffic Safety. "We want to analyze driver behavior to see if making it tougher is necessary." He compared the cell phone measure to a state law requiring use of seat belts, which was changed from a secondary offense to a primary offense, and now allows police to stop motorists for not wearing one. That change was made because statistics showed that 2 of every 10 drivers on New Jersey roads still weren't buckling up. New Jersey is the second state to outlaw driver use of hand-held cell phones. It is also prohibited in New York, where police can stop motorists for talking on the phone even if no other driving infraction took place.
