SB 710 Subjects Chapter 383 malpractice associations to stricter insurance regulations
Sponsor: Bray
LR Number: 3953S.01I Fiscal Note: 3953-01N.ORG
Committee: Small Business, Insurance and Industry
Last Action: 1/19/2010 - Second Read and Referred S Small Business, Insurance and Industry Committee Journal Page: S130
Title: Calendar Position:
Effective Date: August 28, 2010

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Current Bill Summary


SB 710 - This act modifies the law regarding medical malpractice, to wit, 383 malpractice associations.

PLAN OF OPERATION/FEASIBILITY STUDY - Under the act, any group desiring to provide malpractice insurance for its members shall file a plan of operation or feasibility study with the director (Section 383.015). The plan of operation or feasibility study shall detail the coverages, deductibles, coverage limits, rates and rating classification systems for the insurance the association intends to offer. The plan shall also include historical and expected loss experience, pro forma financial statements and projections, actuarial opinions regarding the association's solvency, and underwriting claim procedures (Section 383.015).

ASSOCIATION SURPLUS AND SOLVENCY REQUIREMENTS - This act requires 383 associations to maintain a policyholders' surplus of at least $100,000 and requires associations to deposit with the director of the department of insurance cash, bonds or treasury notes in the amount of $100,000 (Section 383.020).

The act removes the prohibition on the Department of Insurance which precluded it from placing limitations on the amount of premium an association can write or on the amount of insurance or liability limit an association can provide. The act authorizes the director to require an association to submit a plan to restore its surplus to at least $100,000 (Section 383.035).

The act requires 383 associations to maintain a specified ratio of premiums written to surplus held. If an association fails to maintain the specified ratio, the director shall order the association to bring its ratio into compliance with the specified standards. If the association fails to comply with the ratio standards for two or more consecutive years, the director may take charge of the association in the same manner as a mutual casualty company (Section 383.036).

The act provides that medical malpractice insurers shall not issue policies in which the director finds, after notice and opportunity for a hearing and based upon competent and substantial evidence on the record as a whole that the base rates of the insurer are excessive, inadequate or unfairly discriminatory.

This act is substantially similar to SB 1098 (2008) and SB 512 (2007).

STEPHEN WITTE