Missouri Blocks Med Mal Insurer

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NU Online News Service, June 20, 3:09 p.m.EDT?The Missouri insurance department said it had secureda temporary restraining order against Security Trust Insurance Co.,a U.S. Virgin Islands-based carrier that was marketing medicalliability insurance to physicians in St. Louis and Kansas City,Mo.

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Authorities said they believe their action came before anydoctors had purchased the unapproved product.

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Randy McConnell, a spokesman for the department, explained thatSecurity Trust is not a licensed carrier in his state, but that thecompany has been claiming in its literature that there areregulatory loopholes it can use to sell insurance through certainassociations.

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"The company had an obscure theory that it is exempt from thelicensing requirement," Mr. McConnell said, noting that Connecticuthad also taken action against Security Trust with acease-and-desist order.

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He said there will be a hearing on the restraining order June 25at Cole County Circuit Court in Jefferson City, Mo.

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"In Missouri, you move from the temporary restraining order topreliminary injunction to permanent injunction. In the meantime,the company cannot sell its product," Mr. McConnell explained.

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Mr. McConnell noted that marketing campaigns for SecurityTrust's medical malpractice insurance were being rolled out thismonth. These campaigns, he said, were being conducted by the St.Louis office of Itasca, Ill.-headquartered Arthur J. Gallagher& Co., as well as two local medical societies: St. LouisMetropolitan Medical Society, which has some 2,000 member doctors,and Kansas City Physicians Organization, which has close to 800members.

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Arthur J. Gallagher & Co. and the two physician organizationgroups involved declined to comment on Security Trust. SecurityTrust did not return calls seeking comment.

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According to the insurance department, one of the attractionsfor Security Trust's medical malpractice insurance that was beingmarketed was its low price.

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"Some OB/GYN practitioners we spoke to said Security Trust'spremiums were equal to rates they were paying in 1999. Generally,Security Trust's premiums were said to be less expensive," said Mr.McConnell.

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He said his agency is not aware of any doctors who purchasedcoverage from Security Trust at this point. "We have been askingdoctors to contact us if they have coverage from Security Trust,and no one called us yet. And we are grateful," he said.

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To obtain a license to sell insurance in his state, the insurerwould have to demonstrate policies and rate structures as well asminimum surplus and capital adequacy that meet Missouri'sstandards. The company would also have to make a deposit to showthat it can pay out claims. "But the company had absolutely nocontact with us whatsoever," said Mr. McConnell.

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He commented that occurrences like these are another sign thatdoctors are having difficulties with their increasing medicalmalpractice rates.

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"Anytime there is a hard market, with problems of availabilityand affordability, you see unlicensed operators come in and try totake advantage of that," he said.

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