“A good time to be buying coverage…” is a statement I often hear in the halls as I walk through the office. Missouri physician’s have been financially benefiting from a general “soft market” in medical malpractice insurance for the last few years, with many carriers, both long term and new to the market competing for new business. At the heart of the Missouri soft market was the passing of tort reform. Missouri tort reform has prompted this soft market. The following provisions of the tort reform made the biggest impact on the Missouri soft market:
- Venue is limited to the place of first injury.
- Punitive damages are limited to the lesser of $500,000 or five time the actual damages.
- Benevolent gestures of sympathy are inadmissible as evidence of liability.
- Cap on non-economic damages of $350,000.
The Meaning of the Term “Soft Market”
A soft market is the industry term for a time period when there are much fewer medical malpractice claims; therefore the medical liability insurance carriers are performing well financially. Well performing medical liability carriers means more competition and lower premiums. The effect of lower medical malpractice insurance premiums has helped stabilize the Missouri market and allowed doctors some breathing room that was not previously there.
“383” Carriers? What Are They?
Missouri is a state dominated by “383” carriers, or carriers that were developed under the Section 383 of the Missouri insurance code, which allows a carrier to start up with minimum capitalization, but with a policy form that allows for future assessment if additional capital is needed. This structure has been available since the 1970’s and enjoyed a long stretch of success for physicians until the early 1990’s when the original mutual assessable carriers were sold to for profit carriers, which brought about premium increases and market instability. The 383 structure has served Missouri physicians very well for the last few years, as the pricing from non-assessable carriers in the early 2000’s had forced many physicians into employment relationships with hospitals or early retirement. Physician malpractice insurance premiums were extremely high due to the lack of tort reform and profit focused carriers. Non-assessable carriers have recently begun to respond to the pricing corrections in the market, but slowly. Of the 383 carriers, Missouri Professionals Mutual has held the largest market share for many years and has offered policyholders pricing stability and savings, as well as strong legal defense performance.