New Med-Mal Insurer Approved in Mo.

The Missouri Department of Insurance (MDI) announced it licensed a new medical malpractice insurer in the state, the seventh to be okayed this year. The newly approved entity is a physician-organized carrier organized in Poplar Bluff that is expected to write coverage for doctors statewide.

MDI Director Scott B. Lakin characterized the licensing of Physicians Professional Indemnity Association (PPIA) as the latest evidence that doctors themselves were moving to ease Missouri’s capacity problem, which was created when several national malpractice insurers either stopped writing coverage altogether or closed in the past two years.

Eight Poplar Bluff doctors organized PPIA, which will operate as a special kind of mutual or policyholder-owned insurer under Missouri law. Such insurers were first authorized in 1975 to help physicians and other health-care providers obtain coverage after most multi-line insurers withdrew from the business.

The so-called “Chapter 383” companies differ from most mutuals because policyholders not only own the company, but are responsible for any deficits through special assessments in addition to annual premiums. This structure allows such insurers to begin operating with less initial financial investment.

“In both 1975 and 1986, the physician-controlled companies played leading roles in resolving the affordability and availability problems in the medical malpractice market,” Lakin said. “Today, the leading malpractice insurers in Missouri have their roots in this movement, although many became so successful that they evolved into publicly held corporations.”

PPIA plans to write all physician specialties, including surgery, which has relatively expensive rates compared to other types of medical practices. The company expects to begin accepting applications by early June, which could make coverage available for the July 1 renewal cycle common among doctors.

A Jefferson City firm, Corporate Insurance Services LLC, will manage the new medical malpractice insurer’s operations, including processing of applications, but no contact number for prospective policyholders is yet available. The company initially will solicit business through direct marketing, but may expand to brokers in the future. PPIA has not yet filed a formal business plan with MDI.

Before 2003, the Chapter 383 companies in Missouri had dwindled to one, the Missouri Hospital Plan, operated by the Missouri Hospital Association, which focuses on its member health-care facilities. But earlier this year, MDI licensed Missouri Physicians Mutual, based in St. Louis, to write for individual doctors and medical groups.
Other physicians in St. Louis, Kansas City and Springfield also have expressed interest in forming 383 ventures.

From August 2001 to May 2002, Missouri lost 57 percent of its market capacity to write new business for physicians and surgeons because two national writers closed because of insolvency, the largest national carrier withdrew from the entire line of business and Missouri’s leading writer exhausted its financial capacity to expand as demand grew.

This capacity problem greatly complicated efforts to insure doctors who lost their carriers or were shopping for new insurers, and the restricted supply – along with other factors – fueled major increases in rates.