The largest Texas medical liability insurer said civillitigation reform measures enacted since 2003 will allow thecompany to put through a fifth-successive rate cut.

Physicians' carrier Texas Medical Liability Trust (TMLT) saideffective tort reform has reduced claims intake and associatedlegal expenses, allowing its board to approve a 6.5 percent ratereduction for all medical specialties and classes, effective Jan.1, 2008.

Policyholders will also see an “unprecedented” third-straightdividend, which the board has approved, the company said.

Improved earnings have strengthened TMLT's financial position,making these rate reductions and dividends possible, the carrierexplained. The Austin, Texas-based company noted that it was makingits announcement on the anniversary of lawsuit reform.

All current TMLT policyholders renewing their policies in 2008will receive a dividend equal to 22 percent of their expiringpremium. The total dividend declared is approximately $35 million.The dividend will be applied at policy renewal.

TMLT said it has reduced rates five-consecutive years since thepassage of House Bill 4 and Proposition 12 in 2003: 12 percent in2004; 5 percent in 2005; 5 percent in 2006; 7.5 percent in 2007;and 6.5 percent in 2008.

The net effect of these cumulative rate reductions, TMLT said,amounts to a 31 percent reduction from 2003 rates and approximately$200 million of premium savings.

By the end of 2008, renewing TMLT policyholders will havereceived dividends in the past three years amounting toapproximately $75 million.

Since the passage of Proposition 12 and medical liability reformof 2003, TMLT policyholders will have realized cumulative savingsof approximately $275 million from rate reductions and dividends,the company reported.

The insurer cautioned, however, that there is no guarantee anever-changing business climate will ensure future rate reductionsor dividend.

TMLT said it continues to work diligently to protect 2003 tortreforms in an effort to keep premiums as low as possible. Ratechanges and dividend considerations are determined annually by theTMLT board, executive management and financial consultants to theTrust.

Proposition 12 implemented the major reforms of House Bill 4,which became law on June 11, 2004, but was challenged in court bytrial attorneys.

The reforms included a cap on non-economic damages for pain andsuffering of $750,000 (($250,000 for physicians, $250,000 for thefirst hospital or health care facility, and $250,000 for anyadditional facilities).

It also allowed for periodic payments for awards greater than$100,000, protections for emergency room care providers andinstituted expert witness reforms aimed at curbing frivoloussuits.