SB 811 - This act makes numerous changes to the laws regarding medical malpractice insurance.
TAX CREDIT FOR MEDICAL MALPRACTICE PREMIUMS FOR HEALTH CARE PROVIDERS - This act creates a tax credit for health care providers to offset medical malpractice insurance premiums. The tax credit is in an amount of up to 15% of an annual increase in the provider’s medical malpractice insurance premium. The tax credit is capped at $15 million (Section 135.163).
FAILURE TO REPORT CLAIM INFORMATION - This act provides that insurers and self-insured health care providers failing to timely report claim information pursuant to Sections 383.100 - 383.125 will be subject to Section 374.215 penalties and fines Section 383.112.
COMPETITIVE BIDDING PROCESS - This act allows the Director of the Department of Insurance to establish a competitive bidding process with respect to the Missouri Joint Underwriting Association after the director determines that medical malpractice insurance is not reasonably available in the voluntary market (Sections 383.150 and 383.151).
INSURANCE OVERSIGHT AND RATE REDUCTION PROGRAM - This act establishes new standards and procedures for making and using rates for medical malpractice insurance. First, the act exempts medical malpractice insurance from the rate regulations that apply to other forms of property and casualty insurance (Section 379.316). The act provides that such rates shall not be excessive, inadequate or unfairly discriminatory (Section 383,151). Any insurer that desires to increase a rate by less than 15% shall file the rate, along with supporting data, no later than 30 days after such rate becomes effective. These filings shall not be subject to approval or disapproval by the Director of the Department of Insurance (Section 383.200).
Any insurer desiring to increase a rate 15% or higher shall submit a complete rate application to the director. The applicant has the burden of proving that the requested rate increase is justified.
The act provides that every insurer that has filed a rate increase not requiring approval by the director for two consecutive years and in the 3rd desires a rate increase in which the aggregate over the three-year period will exceed a total 40% rate increase will have to prove that the rate is justified.
Every insurer that has not filed or had a rate increase approved for three consecutive years may file a rate increase in the 4th year in an amount not to exceed 25% without being required to justify the rate increase.
The director has authority to promulgate rules which will set forth standards that insurers will use to calculate their rates. The rules shall establish a range within which an expected rate or return shall be presumed reasonable, establish categories of expenses that shall be presumed reasonable, establish proper weights to be given to different years of experience and any other standard deemed reasonable and appropriate by the director.
The director shall require insurers to submit in their application for a rate change the following:
(1) A comparison between the insurer's projected incurred losses and its ultimate incurred losses for the eight most recent policy years for which data is available and
(2) A memorandum explaining its methodology the insurer used to reflect the total investment income it reasonably expects to earn on all its assets during the period the proposed rate is to be in effect.
The director shall notify the public of any application for a rate increase of 15% or more, and shall hold a hearing on the application within 45 days. The application shall be deemed approved 90 days after such hearing unless disapproved by the director after the hearing.
This act gives the director the authority to order an insurer to discontinue using an excessive rate and that the insurer refund the excessive portion of the rate to any policyholder who has paid such rate. The director shall not be required to find that a reasonable degree of competition does not exist to find a rate excessive.
The director may consider out-of-state experiences if their insufficient experience in this state. In some circumstances, the director may consider nationwide experience (Section 383.200.3).
COMPRESSION OF RATES AMONG DIFFERENT MEDICAL SPECIALTIES - This act provides that the ratio between the base rate of the highest-rated specialty and the base rate of the lowest-rated specialty shall be no more than a ratio of six-to-one (Section 383.205).
EXPERIENCE RATING - This act requires medical malpractice insurers to apply a credit or debit on the provider's loss experience. The insurer shall include a schedule of all such credits and debits, or a description of such alternative method in all filings it makes with the director of insurance (Section 383.210).
DATA DISCLOSURE - This act requires each malpractice insurer, on or before March 1st of every year to file certain information with the department of insurance. The information shall consist of or relate to, but not be limited to: closed claims; judgments, payment, and severity of injury in connection with judgments; rate changes during the previous five-year period; premiums and losses by medical specialty; premiums and losses by experience of insured; and investment performance of the insurer (Section 383.215).
MEDICAL MALPRACTICE INSURANCE QUOTATION SERVICE - This act requires the department by July 1, 2007, to develop and establish an interactive Internet web site enabling health care providers to obtain medical malpractice insurance quotes. Insurers' rate changes must be integrated into the website within 10 days. The site must provide contact information for each of the insurers participating. By December 1, 2007, the director of the department must submit a report to the General Assembly on the development, implementation, and effectiveness of the website (Section 383.220).
FILING OF MANUALS AND CLASSIFICATIONS - This act requires insurers to file new manuals of classifications, rules, underwriting rules, rates, rate plans and modifications, policy forms and other forms to which such rates are applied, that reflect the savings, if any, attributable to each provision in the act (Section 383.225).
NOTICE OF RENEWAL PREMIUM RATE INCREASE - This act requires insurers to provide at least 90 days written notice to insureds of renewal premium rate increases (Section 383.230).
EMERGENCY CLAUSE - This act contains an emergency clause.