Kentucky Halts Med Mal Insurer
NU Online News Service, July 7, 4:07 p.m. EDT?A second state has gone to court to stop a Virgin Islands-based firm from marketing medical liability insurance.
Following a similar action by the Missouri insurance department last month, the Kentucky Department of Insurance said it has obtained a temporary restraining order against Security Trust Insurance Co., a U.S. Virgin Islands-based carrier that has been marketing medical liability insurance in both states without the necessary authorization, according to authorities.
Kentucky Insurance Commissioner Janie Miller said Security Trust has been marketing professional liability coverage to physicians and medical facilities in her state without the proper license.
So far, at least three doctors and one group of clinics in the state have purchased coverage from Security Trust, said Julie McPeak, general counsel at the Kentucky insurance department. "We have advised these doctors that they need to purchase other coverage.
She said if the doctors have unpaid claims, "we may be able to recover damages they may have sustained," Ms. McPeak told National Underwriter. "But we have not heard about any unpaid claims at this time."
In June, Missouri regulators also obtained a temporary restraining order against Security Trust, which they said has been claiming that there are regulatory loopholes it can use to sell insurance through certain associations.
Authorities in Missouri had found submitted applications, but said they believe their action came before any doctors in their state purchased the unapproved product.
The temporary restraining order against Security Trust will be extended in Missouri, until a hearing for preliminary injunction is held on August 14.
Ms. McPeak added, "We have been working with the Missouri insurance department, and their action was not a surprise. We have been trying to reach people at Security Trust, but have not been successful."
She noted that medical malpractice is a big issue in her state, "as it is in other parts of the country." Ms. McPeak explained that Kentucky regulators first learned about Security Trust when a consumer who got a quote from the company made an inquiry, asking why the insurer was not on the list of authorized companies on the insurance department's Web site.
"It was my impression that a local Kentucky broker was working with Security Trust," she said. "This is indicative of the hard market and how consumers are looking for alternative choices."
There will soon be a hearing on the restraining order at Franklin County Circuit Court in Kentucky to obtain injunction, Ms. McPeak said.
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