Medical Malpractice Insurer Slashes Rates

In recent days I have shared several posts (here, here, here, and here) concerning the substantial reduction in the number of medical malpractice cases filed in Tennessee since the enactment of the law that mandates pre-suit notice and filing of a certificate of good faith.

Thus, it is not surprising that State Volunteer Mutual Insurance Company, the doctor-owned medical malpractice insurer that insures the vast majority of non-university based physicians in Tennessee, has slashed medical malpractice insurance rates.

The average rate decrease, effective for renewals on or after May 15, 2010, is $23.1% at $1M / $3M insurance policy limits.    There are different rates of decreases depending on specialty, dividend status, limits, years in practice, and other factors. 

Why the decrease?   A letter to insureds attributes the decrease to "the latest downward trend in the frequency of claims …."   I have reported on this trend before in this post and others.

But that’s not all.  SVMIC also announced a $20,000,000 dividend to its insureds.  The dividend will further reduce premiums because it will be paid as a credit on policies renewed during the 12 months beginning May 15, 2010.   One-fourth of the dividend will be based on the total premiums paid during the last 5 years.   Three-fourths of the dividend will be paid based on paid-claims experience.   Doctors who had claims but no paid claims will still receive a merit dividend.

The average rate decrease of 23.1%  follows rate decreases of 2.5% in 2009  and 4.2% in 2007.  (I cannot put my hands on what happened to rates in 2008.  I will try to find out what happened.)   I predicated in July of 2009 that SVMIC would reduce rates again in 2010, but I admit I did not foresee a 23% decrease.   When coupled with dividend, many SVMIC doctors will see a premium reduction of over 30% for renewals on and after May 15, 2010.

So, if tort reform has already reduced malpractice insurance rates, is there any legitimate reason to further restrict patient rights to file medical malpractice claims?