Health
Insurance Commissioner Dave Jones today announced lower rates for medical malpractice insurance offered by NORCAL Mutual Insurance, The Dentists Insurance Co., and the Medical Insurance Exchange of California’s Physicians and Surgeons program, saving doctors, dentists and other medical providers nearly $19 Million annually in premiums.
Last year, Commissioner Jones required the top six medical malpractice insurance companies in California to submit rate filings to the Department of Insurance to justify their current rates.
After review of those filings, Commissioner Jones called for rate reductions. As a result of the Commissioner’s rejection of excessive rates, three of the companies decreased their medical malpractice rates.
The three remaining companies’ rates are still under review by the Department of Insurance.
“These medical malpractice insurance rate reductions demonstrate once again that giving the Insurance Commissioner the authority to reject excessive rates can result in major savings for policyholders, in this case for doctors, dentists and other medical providers," said Commissioner Jones.
“It simply defies reason that the insurance commissioner has the authority to reject excessive medical malpractice rates for doctors and dentists, but does not have the authority to reject excessive health insurance rates for families, individuals and businesses,” Jones said. “I continue to urge the State Senate to pass Assembly Bill 52 to give the Insurance Commissioner the authority to reject excessive health insurance rates and that the voters be given a chance to reject excessive rate hikes by qualifying the Insurance Rate Public Justification and Accountability Act for the November ballot."
Jones said these medical malpractice rate reductions also demonstrate, once again, the important role that Proposition 103, which authorizes the insurance commissioner to reject excessive rate hikes for property and casualty insurance including medical malpractice insurance, has played in reining in medical malpractice rates since its passage in 1988.
Rates for NORCAL Mutual, the second largest medical malpractice writer in California, are being reduced by 7.07 percent. The reduction saves doctors and other medical providers $9.65 million.
The company also decided to retroactively apply the lower rate to Jan. 1, 2012, so its policyholders wouldn’t have to wait another year before it takes effect.
Rates for The Dentists Insurance Co. are being reduced by 13.42 percent, saving dentists nearly $4 million. And rates for the Medical Insurance Exchange of California’s Physicians and Surgeons program are being reduced by 19 percent, resulting in premium savings of $5.3 million.
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The California Department of Insurance (CDI) announced Tuesday it served an order to show cause, a statement of charges/accusation and a notice of monetary penalty against the New Hampshire Insurance Co. and its authorized agent for claims processing, York Risk Services Group Inc. regarding their handling of claims related to the 2008 Sayre Fire in Sylmar, California.
New Hampshire Insurance Co. is a subsidiary of AIG.
“The department is committed to ensuring that insurers and administrators processing claims on consumers’ behalf adhere to the requirements of the California Insurance Code,” said Adam M. Cole, General Counsel at CDI. “We expect insurers and their agents to be thoroughly diligent in handling claims, especially at times of devastation such as the Sayre fire. The allegations in this case reflect a troubling lack of attention to consumer needs by New Hampshire Insurance Co.”
The Sayre Fire, which occurred on Nov. 14, 2008, led to the loss of 489 residences, including 480 mobile homes, and the destruction of more than 600 structures overall. During the course of the fire, more than 11,000 acres were burned.
In response, both the mayor of Los Angeles and the governor of California issued state of emergency declarations.
The 480 mobile homes destroyed in the fire were located in the Oakridge Mobile Home Park, which, before the fire, housed 600 mobile homes.
The New Hampshire Insurance Co. issued mobile homeowners policies to approximately 370 policyholders whose homes suffered total losses as a result of the firestorm.
In the ensuing months, CDI’s Claims Services Bureau received a number of complaints from New Hampshire Insurance Co. policyholders.
Consequently, CDI investigated the complaints and cited New Hampshire Insurance Co. and York Risk Services Group, Inc. for 125 violations of the California Insurance Code, with each violation representing an alleged unfair or deceptive act.
Under the California Insurance Code, any person who engages in any unfair or deceptive act is liable to the state for a civil penalty not to exceed $5,000 for each act, or, if the act or practice was willful, a civil penalty not to exceed $10,000 for each act.
The California Insurance Code permits New Hampshire Insurance Co. and York Risk Services Group, Inc. the opportunity to respond to the allegations in an administrative hearing.
In 2009, CDI acted on complaints from Sayre Fire survivors relating to disputes over how much extended replacement cost coverage was available under the New Hampshire Insurance Co. policy.
CDI was able to secure an additional 110 percent or 125 percent of fire insurance coverage for most policyholders. This action resulted in approximately $10.8 million in increased payments to the Sylmar fire victims.
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