The new year usually brings many changes in the medical malpractice insurance marketplace for physicians. Many doctors have professional liability insurance policies that renew in January. In the past, many companies have traditionally filed rate decreases in December that take effect for renewal business in the 1st quarter of the following year. This year has been relatively quiet in regards to rate changes, but one company has filed to decrease rates for some specialties. Physicians Insurance Company, upon approval from the Office of Insurance Regulation, plans to lower several specialties in all territories. The specific specialties have not yet been announced, however it is expected that the company will continue to focus on primary care physicians such as family practitioners, internists, and pediatricians. The company shines among a growing number of physician focused carriers in Florida. Although, Physicians Insurance Company is not a larger carrier, it has proven to be one of the most profitable carriers in Florida. The company boasts a loss ratio well under 50%, which is unheard of in the medical malpractice industry. The company has performed so well that it took the notice of a large carrier based in Austin, Texas. Texas Medical Liability Trust, better known as TMLT recently entered into an agreement to acquire Physicians Insurance Company. If approved by insurance regulators, this will add a large source of capital to the carrier which currently writes business in Florida and Texas. The company will also, most likely, share the A rating by AM Best that TMLT boasts.
The marketplace continues to evolve since a major change last year when The Doctors Company completed its acquisition of First Professionals Insurance Company (FPIC) who was the largest medical malpractice carrier in Florida.
Rates have decreased in Florida for many consecutive years since 2004 when new carriers began to enter the state. Physicians have been able to take advantage of this soft markets as rates have dropped as much as 50% for some specialties. Diederich Healthcare opened it’s office in Tampa, Florida in 2004 as the market was just beginning to change.
Rates have changed because of the following factors:
- Lower reinsurance costs
- Tort Reform
- Competition
- Lower claim frequency for several years
- Lower severity of paid claims
The market seems to be near the bottom, however, as reinsurance costs are expected to rise very soon. If acquisitions continue to take place, this will further delete competition among carriers and physicians may have less choices when choosing a malpractice company. Doctors should enjoy the low rates as long as they can, and no one can tell the future, but if the past is any predictor, we will continue to see changes and medical malpractice insurance rates will eventually begin to rise again.
