Malpractice premiums fall under new state program

Chris Jones

Tuesday, April 23, 2002 | 11:19 a.m.

Doctors who want more information can contact American Governmental Risk & Insurance Programs at (800) 284-4747, Ext. 2277, by fax at (713) 652-2216, by mail at 333 Clay St., Suite 1215, Houston, TX, 77002-4005 or by e-mail, mlan@amgrip.com.

Applications can also be downloaded and submitted online through the state Insurance Division's website (doi.state.nv.us).

During a closed-door meeting Monday in Las Vegas, the association's board of directors approved an initial rate plan that will charge doctors premiums based upon their type of practice as well as their personal claims history, said MLAN Chairman Robert Byrd.

Because there are so many variables to consider, Byrd said he could not provide detailed information on how much Nevada's medical personnel would be charged through the association. In general, however, Byrd said doctors should expect premiums for their first year of coverage through MLAN to be lower than the rates they paid commercial insurers for their most recent policies.

"It's really kind of complicated to say what everyone could expect to pay because the classification sheet is about 25 pages," Byrd said of the new rate plan.

To illustrate MLAN's rate structure, Byrd compared its premiums to the most recent rates charged by the St. Paul Cos., which had been Nevada's largest provider of medical malpractice insurance until it decided to exit the medical malpractice market worldwide late last year.

For example, a doctor who previously paid annual premiums of $25,000 to St. Paul Cos. should expect to pay about $16,000 for the first year of coverage through MLAN. Premiums would increase to about $28,000 by the third year and would rise to about $47,000 for year five, Byrd said.

"For the first year, we won't have any prior acts that were covered so doctors will pay less for their coverage," Byrd said. "After the first year, (MLAN) will have 12 months of prior acts to worry about. After two years, it will have 24 months to worry about, so the premiums will go up accordingly ... based on (the association's) increased exposure to risk."

Doctors covered by MLAN would also have to pay for so-called "tail coverage," or insurance that protects against acts committed prior to their enrollment with MLAN, Byrd said. Such coverage would typically be purchased from their previous insurers carriers.

MLAN was created March 15 by Gov. Kenny Guinn to address a shortage of available or affordable medical malpractice coverage in the state. Because it had only one month to become operational, Byrd said MLAN did not have time to conduct a study to determine its own rates. Instead, it loosely derived its initial premiums to be slightly less than those of St. Paul's last approved filing.

Byrd said an actuary will be appointed to immediately study MLAN's initial fees, which could later be adjusted to better fit the needs of the Nevada market.

While three additional entities have approached Nevada Insurance Commissioner Alice A. Molasky-Arman seeking permission to organize new medical insurance companies, she said it's too early to compare how those plans would stack up against MLAN.

"I really don't want the public to be persuaded by 'What ifs,"' Molasky-Arman said. "These plans may or may not materialize, and even after they establish their funding, they still have to obtain a certificate of authority to do business in the state. ... While we hope one or all of these applications can become successful enterprises, it's just too soon to raise the public's expectations."

Although MLAN began accepting applications April 15 and had received more than 108 requests for coverage as of this morning, some Nevada insurance agents and doctors have remained unaware of key details related to the association. Rick Aniello, legislative chairman of the Nevada Independent Insurance Agents, told the board Monday that many agents from his organization still had no idea where to locate applications on behalf of their clients.

Molasky-Arman said representatives from the governor's office also received a number of calls last week from doctors who wanted to know how to contact the association, what types of coverage it would offer and how much its premiums would cost.

While answers to many of those questions have been available on the Insurance Division's website since last week, Guinn has since instructed the Insurance Division to send letters that contain basic facts about MLAN to each doctor licensed in the state. Byrd said those letters would go out today.

In other business, the board also signed a one-year, $600,000 management agreement with American Governmental Risk & Insurance Programs (AMGRIP), a Houston-based subsidiary on Marsh & McLennan that specializes in the management of state-sponsored insurance programs. AMGRIP would likely receive more money once it begins handling claims on behalf of MLAN, Byrd said.

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