Insurance Commissioner Probing Doctors’ Rates for Medical Malpractice

Insurance Commissioner Dave Jones (D) is seeking lower rates for medical malpractice insurance from companies that conduct business in California, the Sacramento Business Journal reports.

Background

In 1998, Proposition 103 put provisions into law that give the insurance commissioner authority to regulate medical malpractice insurance rates. Prop. 103 mandates that insurers apply for approval of rates before implementing any changes.

An insurer identified by the California Department of Insurance as setting potentially excessive rates is required to submit a rate filing with the department justifying its prices. The department then reviews the filing and approves a rate that complies with state law.

Rates in California

The percentage of premium dollars insurers spend on claims is known as the loss ratio (Robertson, Sacramento Business Journal, 2/17).

On average, California malpractice insurers spend nearly 23% of premiums on claims payments and other losses. However, some insurers spend as little as 2% of premiums to pay out claims, according to the insurance department.

Jones said, "Low loss ratios are one indication that premiums may be too high" (Mohajer, AP/San Jose Mercury News, 2/17).

Based on rate data from 2009, the department has issued letters to six of the top 15 medical malpractice insurers in California about their rates (Sacramento Business Journal, 2/17).

For additional coverage on Jones' effort to adjust medical malpractice rates, see today's Capitol Desk post.