In an unusual move, the state has ordered ProSelect Insurance Co., Rhode Island’s second-largest medical malpractice insurer, to put a requested rate hike on hold until a hike request by its top competitor, NORCAL Mutual Insurance Co., is considered next month.
ProSelect, which as of May 26 covered 466 doctors and one nurse-midwife, wants a 7-percent rate hike for them and a 16-percent hike for hospitals and medical facilities, effective Sept. 30. But at hearings in July, it met with resistance from the attorney general’s office and the Rhode Island Trial Lawyers Association, both of whom say rates should go down, not up.
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In the weeks since then, the R.I. Department of Business Regulation and all the parties involved have exchanged e-mails, discussing the methods used by ProSelect to come up with its rate requests as well as legal questions that remain unresolved.
No one knew how the DBR would rule, but an order on Monday surprised everyone: Instead of deciding the ProSelect case on its own merits, as is customary, the DBR ordered ProSelect to hold off on any rate hikes while NORCAL’s own request is heard.
The two hearing officers, Elizabeth Kelleher Dwyer and Paula Pallozzi, invited ProSelect to formally intervene in the NORCAL proceedings, scheduled for Sept. 27 and 28.
“While the department is sensitive to upcoming renewals, it is essential that a consistent approach is utilized … in evaluating rate filings on medical malpractice insurance in Rhode Island,” they wrote. Therefore, they said, they plan to use evidence from the NORCAL case in making their decision about ProSelect. In the meantime, ProSelect’s old rates remain in effect.
Asked for comment, ProSelect lawyer Daniel S. Crocker said the order “was unanticipated,” and the company is now reviewing it and “we’ll respond accordingly once the company has made a determination as to what it means.”
It’s unclear how ProSelect policyholders will be affected, and Crocker wouldn’t discuss the details. Typically, doctors’ policies renew on July 1 or Jan. 1. ProSelect currently insures two hospitals, and institutional policies often do renew on Oct. 1, but the company also has an experience rating system that may allow it to collect the extra premiums without a rate hike.
At NORCAL, general counsel Philip R. Hinderberger did not reply to an e-mail seeking comment.
The California-based, doctor-owned carrier is seeking a 10-percent increase on its rates for doctors and medical practices, effective Jan. 1. (It does not insure hospitals.) Testimony presented by ProSelect at its own rate hearing showed ProSelect’s current base rates are 72.5 percent of NORCAL’s for the same type of coverage. NORCAL nevertheless has a much larger market share than ProSelect, 47.7 percent vs. 19.6 percent of 2004 direct premiums written.
In their order, the DBR’s Dwyer and Pallozzi said they were worried that the data used by ProSelect to set its rates might be too limited and not representative of the full market.
“The department is concerned that not all relevant evidence impacting the marketplace was produced in the hearings,” they wrote, “and that issuing a decision solely on the basis of the evidence presented, without consideration of other available evidence, could lead to inconsistent results among competitive carriers and ultimately impact the availability of medical malpractice insurance in Rhode Island.”
