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Read Making a Killing

home / healthcare / in the media

BestWire
Dec 18, 2003

by R.J. Lehmann, associate editor

SCPIE WITHDRAWS CALIFORNIA RATE INCREASE REQUEST

LOS ANGELES (BestWire) - Seeking to avoid another lengthy showdown with its critics, SCPIE Holdings Inc. (NYSE:SKP) is at least temporarily withdrawing its request to raise medical malpractice rates in California, the company said.

The company's subsidiaries--American Healthcare Indemnity Co. and SCPIE Indemnity Co., the second-largest writer of medical liability coverage in the state--had requested an 8.9% increase for their 2004 rates, over and above a previous 9.9% increase approved in August by Insurance Commissioner John Garamendi, which took effect Oct 1.

That approval followed a lengthy public hearing, during which representatives of the Santa Monica-based consumer action group Foundation for Taxpayer and Consumer Rights challenged SCPIE's original rate request of 15.6% as "excessive" under the terms of California's Proposition 103. In order to avoid another lengthy hearing process, SCPIE spokesman Gregory Harrison said, the company is withdrawing their application and will wait to file a new rate request at some
point in 2004.

"We believe once we have a full 12 months of loss and claims data for 2003, we'll be in a much better position to make our case," Harrison said.

Following SCPIE's announcement, FTCR's senior consumer advocate, Douglas Heller, said his group was extremely pleased and considered it "crystal clear proof that the best way to fight rising insurance premiums is through regulation." Heller said it was a policy objective of his organization to convince doctors and medical associations that their best interests were served by fighting rate increases rather than advocating for caps on liability awards.

A consumer advocacy organization that devotes much attention to insurance issues, the FTCR favors repeal of California's Medical Injury Compensation Reform Act of 1975, which instituted the first caps on medical malpractice damages in the country.

"In California, even with MICRA, you have malpractice rates rising 23% from 1999 until now," Heller said. "That just shows that while the doctors' political interests might be in line with the insurance companies, their pocketbooks are best served by regulation."

SCPIE Cos. has a financial strength rating of B (Fair) from the A.M. Best Co.

According to A.M. Best state/line reports, the top five writers of medical malpractice in California in 2002, based on direct premiums written, were Norcal Group, with 23.5% market share; SCPIE Cos., with 18.4%; Doctors Co. Insurance Group, with 13.5%; Zurich/Farmers Group, with 7.1%; and MIEC Group, with 4.1%.

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