Medical Malpractice News

State Approves Sale Of Medical Malpractice Insurer

(Salem) State regulators have approved a plan to allow the acquisition of Oregon’s largest medical malpractice insurer by a California company. Salem-based Northwest Physicians Mutual Insurance Company (NPM) must now seek approval from its policyholders before its sale to The Doctors Company (TDC) can be completed.

The Department of Consumer & Business Services approved the plan last week based in part on assurances
from both companies that the acquisition should result in lower premiums for Oregon doctors and greater
availability of coverage for medical specialists. TDC officials testified at a November 17 public hearing that average rates for NPM policyholders will fall 8.3 percent for 2006, depending on medical specialty.

“Medical malpractice insurance has been a difficult market for several years,” DCBS Director Cory Streisinger said. “There’s been some improvement, because claims are going down and that means lower premiums. The merger itself should help by creating a stronger insurer that can cut costs for Oregon physicians.”

TDC has pledged to continue participating in the Rural Health Care Reinsurance Program, which was established by the 2003 Oregon Legislature to help rural physicians pay for malpractice insurance, and to explore opportunities to expand NPM’s current patient safety training. TDC will also lift NPM’s current moratorium on writing insurance for obstetricians and others in high-risk specialties.

Streisinger noted that physician-owned TDC is larger and financially stronger than NPM, with a company philosophy that also emphasizes patient safety.

In 2004, TDC and its affiliates had $441 million in surplus, almost 50 times NPM's $9 million. Regulators require insurers to maintain a surplus to protect their policyholders against greater-than-predicted losses. TDC had assets of $1.7 billion and premiums of $497 million in 2004, compared to NPM’s $77 million in assets and $39 million of premium.

NPM will cease to exist under the plan and will be merged into Northwest Physicians Insurance Company (NPIC), a new stock insurance company ultimately owned by TDC. The initial purchase price is $13.5 million, the estimated amount of NPM’s 2005 surplus, but may change based on the company’s final financial results this year. As a mutual insurer, NPM is owned by its physician policyholders, who will receive compensation for their ownership interests under the acquisition plan.

“We believe NPM policyholders will be fairly compensated under this plan if they approve it,” said Joel Ario, administrator of the DCBS Insurance Division. “Benefits from the acquisition, including a larger surplus and lower reinsurance costs, should continue to pay dividends in terms of market stability and favorable rate trends.”

All insurance policies issued by NPM will remain in force and be assumed by NPIC. Employees of NPM will
become employees of NPIC, which will maintain its home office in Salem.

More information is available on the Insurance Division’s Web site: insurance.oregon.gov. Click on What’s New.

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	Did You Know?
	You still have rights even if you signed a consent form A consent form does not give the health care provider a license to commit malpractice. While the execution of a typical consent form indicates acknowledgement of stated risks and complications associated with a given treatment or procedure, it does not relieve the health care provider from his or her duty of meeting the standard of care associated with such treatment or procedure.