Missouri’s new state-sponsored medical malpractice insurance program has begun accepting applications for coverage effective June 30 or later, the state’s insurance department announced recently.
Physicians and other eligible health-care providers can go to the Web site of the Missouri Medical Malpractice Joint Underwriting Association to download an application and directly apply, or they can go through their normal agents and brokers.
At Gov. Bob Holden’s request, Insurance Director Scott Lakin set the state plan in motion last year by holding a public hearing and ruling that medical malpractice coverage is not “reasonably available” for all medical providers, especially some physician specialties.
“We are pleased with the JUA’s approach to this problem, which results from not enough market capacity to meet demand in an affordable way,” Lakin said. “Despite the restrictions imposed by Missouri law, the board of directors has worked to make the JUA available to help physicians and other providers without posing any unnecessary obstacles.”
The JUA’s board, composed of eight insurance executives, recently approved rates that are considered comparable to current private market pricing.
For example, obstetricians outside metro St. Louis and Kansas City with 10 years of practice and no claims would pay base rates of $75,175 for coverage while such doctors in those urban areas pay $83,453. For family practice physicians with 10 years of experience and no claims, base rates are $15,570 in outstate Missouri and $17,226 in greater St. Louis and Kansas City.
Among major points in the JUA’s initial operations:
―Sales are open to most licensed Missouri medical providers, including physicians, dentists, chiropractors, hospitals, nursing homes and group practices.
―The practices must be located solely within Missouri.
―The policies will provide coverage on an occurrence basis. These policies insure any incident that occurs during the policy period, no matter when it is filed. Historically the dominant form of coverage, occurrence policies in the past decade have given way to less-expensive “claims-made” contracts, which only provide coverage if both the medical event and the claim occur during the policy period; claims-made policies, however, eventually require the provider to buy costly multiple policies or riders for full protection.
―The contracts will provide coverage up to $1 million per incident and $3 million per policy year, or the normal requirements for physicians and other providers in managed care networks.
―The JUA also will sell prior acts and general liability coverage with the same limits. The prior acts policies will resolve problems faced by providers who had claims-made policies before; general liability provides broader coverage for corporations.
―The board approved an alternative that will ease the potential burdens of a legal provision requiring JUA policyholders to pay the equivalent of a double premium their first year. Policyholders can meet that requirement by paying cash or signing a promissory note, which is subject to call at a later date.
―The JUA will offer a payment plan that calls for 40 percent of the costs up front, 30 percent within 60 days and the remainder at 120 days.
―Agents will earn 5 percent commissions. Policy prices will not vary based on whether an agent is involved, so providers can continue to use their former brokers and agents without penalty.
Missouri’s current malpractice difficulties resulted after a series of national insolvencies and market withdrawals reduced the state’s former market for new business by 70 percent. At least eight companies either failed or decided to no longer sell malpractice coverage nationally; another large writer declared a moratorium on new physician policies after a period of rapid growth.
At least 10 companies now are writing new physician business in Missouri, but several either have highly restrictive eligibility rules or are not accepting large numbers of new policyholders. Five companies―including one that will not take new customers―account for 83 percent of the entire doctors’ market, which is the one most affected by current conditions.
The JUA board established the plan in time to write policies for the large block of physicians whose policies expire around June 30. June and December are the prime seasons for physicians to shop for new coverage.
The JUA contracted with one of the nation’s largest insurance brokerages and risk management consultants, Marsh Inc., to handle the program’s daily operations. Rates were developed by Tillinghast, which is among the largest actuarial firms.
Besides the Web site, interested medical providers or agents can contact the JUA at (800) 806-7015.
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