Fla. Med Mal Market Recovering, Says OIR Report

NU Online News Service, Oct. 8, 2:50 p.m. EDT

The Florida medical malpractice market is continuing a recovery that began when the state's legislature enacted reforms in 2003, a recent report by the Florida Office of Insurance Regulation states.

The 22 leading medical malpractice carriers in the state, which make up 80 percent of the market, reported their fifth consecutive year of "broad profitability," according to the report, while rate filings reflect an average 7.1 percent decrease for the primary medical malpractice market–physicians and surgeons.

The report notes that profitability, measured by return on surplus, is down from 2007, but adds that "return on surplus" takes into account profitability in states other than Florida and for lines other than medical malpractice. Return on surplus for leading carriers only writing medical malpractice in Florida was 10.4 percent, the report states.

The rate filing decrease figure for the primary medical malpractice market could also be "misleading," according to the report, as some carriers did not file a change. "When looking at the effective rate trend based on all approved rates in force, this market has shown a decline in rates of over 10 percent," the report says.

It adds that some specialized areas in medical malpractice showed rate increases based on 2008 rate filings, including dentists, which rose 4.6 percent, and podiatrists, optometrists, chiropractors and other specialized areas, which rose just under 3.7 percent.

Filings for nurses dropped 12 percent, according to the report.

In total, the report states there were 3,336 closed claims in 2008, which paid an estimated $700 million; $519.1 million in damages paid, and the remainder in loss adjustment expense.

Generally, the report notes that loss and expense ratios for the 22 leading medical malpractice carriers are similar in Florida to what they are experiencing in other major markets, and seven new medical malpractice carriers entered the Florida market in 2008.

Additionally, the report says solvency risk "does not appear to be a critical issue with these sample firms, and these firms have shown favorable reserve development in 2008 for the third year in a row, reversing a previous trend of adverse reserve development."

"This report…shows the total medical malpractice insurance premium for the state of Florida dropped in 2008 for the fifth consecutive year," said Florida Insurance Commissioner Kevin McCarty. "This is very encouraging news for doctors and hospitals."

The OIR is required to submit a report annually on the medical malpractice market as part of the 2003 reforms.