INSURANCE - MALPRACTICE;

You asked the following question about the Connecticut Medical Insurance Company (CMIC):

1. What was its proposed premium rate filing in 2002 and 2003?

2. What share of the medical malpractice insurance market does it hold?

3. Is CMIC a profit or nonprofit corporation?

4. What was CMIC’s loss ratio in 2001 and 2003?

Actuaries, Tillinghast-Tower Perrin, recommended that CMIC increase premium rates 49. 9% for policy year beginning January 1, 2002. CMIC elected to implement an overall 20. 5% rate increase in 2002 for its most widely held $ 1M/$ 4M claims-made policy. CMIC also imposed a 5% premium charge on physician corporations with separate professional liability policy limits. In the past this coverage was provided at no cost.

Tillinghast-Tower Perrin recommended that CMIC increase premium rates 69. 2% for policy year beginning January 1, 2003. CMIC elected to implement an overall 35. 0% rate increase in 2003 for its $ 1M/ $ 4M

claims-made policy. CMIC also (1) increased by 7. 2% the limit factor for policies with liability limits greater than $ 1M/$ 4M, (2) increased physician corporate premium by 5% (to 10%), and (3) reduced or eliminated several discount and credit programs resulting in a 14. 3% increase.

In Connecticut, medical malpractice insurance rates must be filed with the Insurance Department prior to their use. Specific approval is not required, but the insurance commissioner retains the right of subsequent disapproval if she determines the medical malpractice insurance market is not competitive (CGS § 38a-676).

In 2001, 66 insurers underwrote medical malpractice insurance in Connecticut. But, two-thirds of them, collectively, collected less than $ 23 million in direct written premiums. The remaining one-third collected over $ 100 million in total direct written premiums.

CMIC collected $ 34 million in direct written premiums or about 26. 7 % of the total $ 130 million medical malpractice market. Its closest competitor, St. Paul Fire and Marine Insurance Co. , collected $ 24 million in direct written premium or 18. 4% of the market. St. Paul Fire and Marine Ins. Co. withdrew from the medical malpractice business in 2002.

CMIC is a mutual insurer owned by its physician-policyholders. In 2002, the board of directors declared a $ 2 million policyholder’s dividend that was applied as a credit to eligible policyholders’ renewal premium. The dividend equated to a 5% premium credit. In 2001, the board declared a $ 4 million policyholder dividend and a $ 6 million dividend in 2000.

Loss ratio refers to the proportion which losses incurred bear to the earned premium. In 2000 and 2001, CMIC’s loss ratio was 155. 5% and 163. 5 %, respectively. 2003, data is not yet available.

JH: ts