Law Feature -- November 2004
Benefits from the tort reforms passed in 2003 continued in September as the Texas Medical Liability Trust (TMLT) marked the one-year anniversary of the passage of Proposition 12 by announcing it is cutting professional liability insurance rates by another 5 percent on Jan. 1. Coupled with the 12-percent cut last year, the state's largest liability insurance carrier has reduced its rates 17 percent since voters approved Proposition 12 on Sept. 12, 2003.
"Tort reform in Texas gets a clean bill of health," Lt. Gov. David Dewhurst said as he and TMLT leaders announced the rate reduction at an Austin news conference.
TMLT President Tom Cotten said the reduction represents $34 million in savings to Texas physicians and "is indicative of the triumph of medical liability reform in Texas."
Texas Medical Association President Bohn Allen, MD, welcomed the news but called on the other Texas liability carriers to follow suit.
"TMLT is a physician-owned insurer more interested in supporting Texas physicians than in boosting the profits of out-of-state insurance companies," he said. " It's time these other insurers acknowledge the value of Prop 12 and slash their unsupportable rates."
Dr. Allen said that tort reform "has proven to be effective in culling meritless lawsuits" and that patients voted for Proposition 12 "because they wanted their doctors to remain in practice." He added that a recent TMA survey shows a reduction in the number of physicians cutting back on their services. (See "Relief in Sight," October 2004 Texas Medicine , pages 33-35.)
The same day the TMLT rate cut was announced, Texas Insurance Commissioner José Montemayor told the Senate State Affairs Committee that tort reform has dramatically affected the state's liability insurance climate. Premiums have decreased about 10 percent over the past year, insurance is now more available, and 13 new carriers have started writing policies in Texas, he said.
Two years ago, he added, liability insurance was hard to get and rates were rising.
Even More Good News
On another liability insurance front, the Texas Medical Liability Insurance Underwriting Association, also known as the Joint Underwriting Association, has canceled its plans to ask the Texas Department of Insurance (TDI) for a 35-percent rate hike increase. It also decided it would not impose a surcharge on policyholders next year.
JUA Executive Director Joe Chilton says the rate increase was withdrawn "because the insurance department did not agree with it. Rather than belabor the point, we just withdrew it."
He added that the surcharge was dropped because it was unnecessary.
The JUA provides coverage to physicians if coverage is rejected by two or more carriers.
The maximum limit currently available is $1,000,000 each occurrence, $3,000,000 aggregate. The minimum limit available is $100,000 each occurrence, $300,000 aggregate. All policies are written on an annual basis, and defense costs are in addition to the policy limits. The JUA does not provide prior acts coverage.
For more information, call (512) 452-4370 or log on to the JUA Web site.
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