Web posted Friday, December 14, 2001


Largest Malpractice Insurer Quits

LINCOLN (AP) -- Many of Nebraska's 2,000 physicians are scrambling to find medical malpractice insurance after the surprise announcement by The St. Paul Cos. that it will stop providing coverage.

The St. Paul, one of the nation's largest medical malpractice insurers, said Wednesday that is getting out of the business. The St. Paul is the largest provider of medical malpractice insurance in Nebraska.

''We just always thought that they'd be around because of their size,'' said Dr. Daniel Rosenquist, a family practitioner in Columbus. ''If we're losing the biggest insurer in the business, what does that mean?''

The American Medical Association said the announcement would create havoc for doctors trying to get insurance.

Rosenquist and other Nebraska doctors said they fear the company's action will push some doctors to retire earlier than planned, quit practicing in rural areas, or change the kinds of care they provide.

Any of those results could make it harder for Nebraskans to find medical care.

''You have the potential of losing services in rural areas of Nebraska,'' said Dr. Peter Whitted of Omaha, who heads the Nebraska Medical Association's professional liability committee. ''People will be making financial decisions about what kind of services they'll be willing to provide.''

Family practice doctors, especially, may choose to stop delivering babies if they cannot find another insurance carrier or their premiums soar.

The St. Paul writes just under 10 percent of U.S. medical malpractice insurance coverage, second only to New York-based Medical Liability Mutual Insurance Co., said Mark Hamel, company spokesman.

The company also will shed other unprofitable international business and narrow its reinsurance operations.

The St. Paul will get out of the medical malpractice insurance business gradually by not renewing policies as they expire, in accordance with regulatory requirements, said Jay Fishman, chairman and chief executive. The process is expected to take two years.

The St. Paul's move ''reflects the difficulty that many insurers have experienced in recent years with the medical malpractice line of insurance,'' said P.J. Crowley, vice president of the Insurance Information Institute in New York.

''Across the industry, insurers are paying $1.30 on average for every dollar in premium that they take in,'' he said. ''It has been the worst performing line of insurance across the industry.''

''Jury awards have been out of control and they keep driving up the cost of medical malpractice,'' he said. ''At some point, that's the critical component that needs to be addressed.''

The St. Paul's decision to get out of the malpractice business will drive up prices, Crowley added.

''You always have the forces of supply and demand at work,'' he said. ''Where there is reduced capacity, by economic design prices are going to go up.''

More than two-thirds of the nation's medical malpractice is written by 25 companies, and about 100 companies have some exposure.

The St. Paul will continue to offer property, workers compensation and commercial auto insurance for health care professionals and facilities through its commercial underwriting operation.

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