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NEWS RELEASE
Jun 20, 2003


CONTACT: Carmen Balber - 310-392-0522 x324

Florida Insurer Reneges On Promise to Lower Rates If Malpractice Cap Enacted

California's 2nd Largest Insurer Says Liability Limits Didn't Work
Santa Monica, California -- Florida's largest medical malpractice insurer, FPIC, announced yesterday that it will not fulfill its promise to lower doctors' premiums if the Florida legislature enacts a liability cap. The retraction is more proof that liability limits will never lower premiums, and only insurance reform including a mandated rate rollback will reduce physicians' rates, said the California-based Foundation for Taxpayer and Consumer Rights (FTCR).

"Insurers didn't lower malpractice premiums when a damage cap was passed in California, and they aren't going to lower rates in Florida either," said FTCR consumer advocate Carmen Balber. "The insurance industry's bluff was called and exposed: Damage caps have nothing to do with how much doctors pay for insurance."

Two weeks ago, in an effort to boost Governor Bush's proposal to cap non-economic damage awards at $250,000, the Florida insurance industry vowed it would reduce malpractice premiums by 20% if a cap was passed by the legislature. However, as soon as the Florida Senate indicated a willingness to pass a cap on Wednesday, FPIC withdrew the offer.

"A malpractice cap will never reign in the real crisis: reckless business practices, the volatility of the insurance cycle, and insurer greed. Only insurance reform -- including rate regulation and a mandated rate rollback -- will lower doctors' premiums and stabilize the malpractice market in Florida," said Balber.

California passed the Medical Injury Compensation Reform Act (MICRA) in 1975 which capped non-economic damages at $250,000. In the thirteen years after MICRA's passage, physicians' malpractice premiums increased 450%. Only after California voters passed Proposition 103, a ballot initiative which instituted rate regulation and required a 20% rollback in rates, did doctors see their insurance premiums drop. Read the report.

California Insurer Says Caps Didn't Lower Risk
In documents released last week by FTCR, California's second largest medical malpractice insurer acknowledged that damage caps and other insurer-touted restrictions on patient rights in California failed to reduce malpractice premiums.

FTCR challenged a 15.6% rate increase request by SCPIE Indemnity under the rules of California's insurance reform law, Proposition 103. As part of the Department of Insurance rate hearing SCPIE Assistant Vice President and Associate Actuary James Robertson testified that: "While MICRA was the legislature's attempt at remedying the medical malpractice crisis in California in 1975, it did not substantially reduce the relative risk of medical malpractice insurance in California." Read the news release.



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