Missouri Blocks Med Mal Insurer

Missouri Blocks Med Mal Insurer

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

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

Randy McConnell, a spokesman for the department, explained that Security Trust is not a licensed carrier in his state, but that the company has been claiming in its literature that there are regulatory loopholes it can use to sell insurance through certain associations.

"The company had an obscure theory that it is exempt from the licensing requirement," Mr. McConnell said, noting that Connecticut had also taken action against Security Trust with a cease-and-desist order.

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

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

Mr. McConnell noted that marketing campaigns for Security Trust's medical malpractice insurance were being rolled out this month. 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. Louis Metropolitan Medical Society, which has some 2,000 member doctors, and Kansas City Physicians Organization, which has close to 800 members.

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

According to the insurance department, one of the attractions for Security Trust's medical malpractice insurance that was being marketed was its low price.

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

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

To obtain a license to sell insurance in his state, the insurer would have to demonstrate policies and rate structures as well as minimum surplus and capital adequacy that meet Missouri's standards. The company would also have to make a deposit to show that it can pay out claims. "But the company had absolutely no contact with us whatsoever," said Mr. McConnell.

He commented that occurrences like these are another sign that doctors are having difficulties with their increasing medical malpractice rates.

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