California Mandates 3 Medical Malpractice Insurers Reduce Rates

California insurance commissioner Dave Jones recently mandated lower rates for medical professional liability insurance offered by NORCAL Mutual Insurance, the Dentists Insurance Company and the MIEC Physicians & Surgeons program.

Last year, Jones asked California’s top six medical malpractice insurance companies to submit rate filings to the Department of Insurance and justify their current rates. After review of those filings, the department required NORCAL Mutual to reduce its rates by 7.07 percent, saving its insureds $9.65 million. The Dentists Insurance Company reduced its rates by 13.42 percent, saving its insureds nearly $4 million, and MIEC reduced its rates by 19 percent, saving its insureds $5.3 million. According to Jones, doctors, dentists and other medical providers insured by these companies will save nearly $19 million annually in premiums following the rate reduction. Premiums from the other three companies asked to submit rates are still under review by the department.

Jones’ authority to regulate medical malpractice insurance rates stems from the passage of Prop 103 on Nov. 8, 1988. The ballot initiative gave the elected insurance commissioner the authority to approve property and casualty rates before they go into effect.

Advocates for the repeal of California’s non-economic damage cap have jumped on the Prop 103 bandwagon. They have come out vocally in support of the insurance commissioner’s power to regulate insurance, calling Jones’s flexing of his authority more effective at reducing medical malpractice insurance premiums than California’s MICRA Act, which has long been considered the gold standard of medical malpractice tort reforms. At the heart of MICRA is a $250,000 cap on non-economic damages. According to those advocating the repeal of the state’s non-economic damage cap, 13 years after the passage of MICRA and its non-economic damage cap, medical malpractice insurance rates had grown by 450 percent; three years after the passage of Prop 103, which allows for greater regulation of the medical malpractice insurance industry, medical malpractice insurance premiums had shrunk by 20 percent.

Some in the industry have argued that Jones’ call for rate reductions is political in nature. He has gone on record in support of Assembly Bill 52, which would also grant the insurance commissioner the ability to regulate healthcare insurance rates. Assembly Bill 52 is currently being considered in the California S