By Matt Gracey
By now physicians and surgeons across Florida have realized that the malpractice insurance crisis of the early 2000s is over. Mailings, faxes and advertisements from agents and insurers, some large, established ones, and some new start-ups, are bombarding doctors with the good news.
In the last two or three years, almost every malpractice insurer in Florida has lowered their rates. For some doctors the rate reductions have seemed too little but in terms of actual, cumulative savings across the state, doctors have spent millions less on coverage.
Robert White, Jr., president of First Professionals Insurance Company (FPIC), reports that FPIC’s base rates have been reduced by 19 percent since Dec. 1, 2006, excluding the impact of Florida Insurance Guaranty Association (FIGA) assessments. The rate reductions have resulted in a savings of $43 million for FPIC insureds since Dec. 1, 2006, again excluding the FIGA assessments. “Although premium savings may be impacted by tort reform, we believe that the drop in claims frequency is a more accurate reason for premium decrease,” reports White. “Claims frequency is down because of a number of factors, including tort reform, aggressive claims defense, wider use of alternative dispute mechanisms including arbitration, and the patient safety movement.”
SNL Financial provides data included in annual statements from Florida medical professional liability insurance (MPLI) carriers. Direct written premium for those Florida MPLI carriers in 2006 and 2007 indicates that Florida doctors paid $184.4 million less for their MPLI coverage in 2007 than they did in 2006. White explains, “If we assume that rates decrease an average of another 12 percent statewide for 2008, then Florida doctors will have paid $263,952,000 less in 2008 than they did in 2006 for a cumulative savings of $448,362,000.”
According to White, “While tort reform is not the sole reason that premiums paid by Florida physicians have decreased, they are a factor that has contributed to lower premiums as they have helped spawn the low claims frequency that has driven the reduction in premiums. The physicians of Florida need to work together to insure that the tort reform package that passed in 2003 survives the expected constitutional challenge. The most immediate task at hand in that endeavor is influencing the selection of Florida Supreme Court justices towards individuals who would support caps on non-economic damages.”
So while malpractice rates have decreased greatly because of the reduced claims frequency, there is still much to be concerned about. Courts in Georgia ruled against their recently passed $350,000 cap on non-economic damages and every expert in Florida has predicted numerous challenges to the reforms here. In contrast, the Texas courts have so far upheld the most effective medical tort reforms of any state this decade. Because of Texas’ cap of $250,000 on non-economic damages and some other tort changes, 7,000 doctors have flooded into Texas in the last three years at a rate that has overwhelmed the medical licensing board. The savings to doctors from just one of Texas’ 30 medical malpractice insurers was recently pegged at $217 million over the last four years.