New Jersey Banking and Insurance Acting Commissioner Donald Bryan announced that medical malpractice liability insurer MIIX Insurance Company will continue operating in solvent runoff, a financial condition it has operated in since 2002.
Bryan also announced that upon approval by the court, the department will make payments to claimants who had accepted MIIX’s settlement offers beginning Sept. 7.
In a solvent runoff, the department determines that a carrier has enough funds to pay off claims from existing policies but should not continue taking on new customers. MIIX Insurance is currently operating under an order approved in February by Judge Neil Shuster of the Superior Court of Mercer County. Part of the order included placing a stay on litigation until meritorious claims could be settled. In May, MIIX made offers of settlement to about 800 claimants in an attempt to avoid entering liquidation. A majority (more than 700) of those receiving offers accepted them.
This latest announcement signals the expectation that MIIX will continue in solvent runoff instead of entering liquidation. Under New Jersey law, claims of a company liquidated as insolvent are referred to the Property-Liability Insurance Guaranty Association, where coverage is limited to $300,000 per claim.
“Today’s accomplishment could not have been made without the cooperation provided by MIIX insured physicians and members of the legal community. The high level of acceptance of MIIX’s settlement offers reflects that those offers were fair and equitable,” said Bryan. “This successful step is expected to leave MIIX Insurance with sufficient funds to continue in solvent runoff. MIIX will settle current and future cases using the same equitable formula.”
MIIX stopped writing new policies in 2002 and was placed under the control of the department in 2004. As of October 2004, MIIX had a negative surplus of approximately $306 million. At that time, assets were approximately $550 million and liabilities were estimated in excess of $856 million.
Formed in the 1970s, MIIX started as a reciprocal insurer, a non-profit company owned by the New Jersey physicians who were its policyholders. In the 1990s, MIIX changed its focus and began entering markets outside New Jersey . In 1999, it converted to a publicly traded company, and physicians who had been insured by MIIX for at least three years received stock. The company faced financial difficulties following a subsequent expansion into 25 other states.
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