Insurance Commissioner Cuts Malpractice Insurance Increase

Acting on the recommendation of an administrative law judge, Insurance Commissioner John Garamendi (D) cut SCPIE Holdings' malpractice insurance rate increase for 9,000 state doctors to 9.9% from 15.6%, the Los Angeles Times reports. Garamendi's order will be effective Sept. 22. SCPIE Holdings has until then to appeal the order, but company president and CEO Donald Zuk said that the company would not file an appeal. The Foundation for Taxpayer and Consumer Rights, which initiated the hearings by appealing the proposed increase, said that the reduction in the rate increase will save doctors more than $16 million in 2003 and an additional $7.2 million next year. The organization added that even without a premium increase to date this year, SCPIE Holdings had recorded a profit in the second quarter. However, Zuk said, "This profit, if annualized, would represent approximately a 1% return on equity, hardly overwhelming evidence that the requested rate increase was not justified."

In addition, Zuk called for changes to the rate increase approval process, noting that SCPIE Holdings applied for the rate increase almost a year ago with the intention of implementing the rate increase Jan. 1, 2003. "We hope that changes can be made to streamline the process so that these lengthy delays can be avoided in the future," Zuk said (Reich, Los Angeles Times, 9/4).