Med Mal Analysis: St. Paul Exit Is A Plus

By Susanne Sclafane

NU Online News Service, Jan. 30, 10:38 a.m. EST?The exit of an insurance giant like The St. Paul Companies from the medical malpractice line is good news for that troubled marketplace, according to a recently-released report.

The report by Chicago-based Cochran, Caronia Securities LLC suggests that St. Paul's departure is a positive because it will prompt more pricing corrections, as well as directing newfound regulatory attention to the line.

Written by analyst Blair Sanford of the firm's San Francisco office, the study released last week advised that, with the potential for price increases, opportunistic players will step in to fill part of the void left by the second largest company's exit.

While the Minnesota-based company had only a 9 percent share of the national market, the report said that the impact of its decision will be "seismic" in 15 states where the company had a market share exceeding 20 percent.

The report entitled Medical Malpractice?Now Curable?" reviews the exodus of a large participant from a historical perspective also. "These times are remarkably parallel to the med mal crisis of the mid-1970s," the study reported.

The report includes a separate section analyzing the current structure of the market, as well as listings of the top 25 med mal insurers countrywide and the top five in each state.

There are also sections analyzing loss reserve development for the medical malpractice line for the industry as a whole, the impacts of external forces on the business, and the level of rate deficiency.

In examining rate deficiency, the report provides a range of double-digit rate increases it says are needed to achieve a break-even result for a single year. Mr. Sanford comments that much more rate is needed to generate a profit and to fill a reserve hole that currently exists.

A final section of the report presents descriptions and commentaries of five publicly-traded med mal companies.

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Med Mal Analysis: St. Paul Exit Is A Plus

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