We've just experienced the third medical malpractice insurance crisis since the 1970s. Every time we go through a hard market, the lives of physicians and the people they serve are disrupted. Although there are clear indicators that we are coming out of the current hard market, we need to find a permanent solution to end the inherent volatility that persists within the medical malpractice insurance market.

Tort reform is not a complete solution. Market disruptions occur, in part, due to economic conditions that are unrelated to the tort system. When we experience a hard market, the insurance industry has difficulty finding the capacity to supply enough affordable insurance to meet the needs of health care providers. Our proposal will stabilize the market and premium rates.

The supplemental malpractice insurance program

Insurance Commissioner Mike Kreidler has proposed legislation to establish a program to provide medical providers and facilities with excess medical malpractice insurance and to help stabilize the fluctuations within the market. By stabilizing the rates within the market, insurance policies will be more affordable and insurers will be able to adequately reserve for their future liabilities.

How would the new program work?

It will be voluntary. Hospitals, physicians, clinics, nurses and other health care providers will continue to buy their malpractice insurance from their existing carrier. However, if they need additional insurance and can't find coverage or an affordable plan in the regular market, they can purchase excess coverage from the supplemental malpractice insurance program.

Health care providers and health care facilities must maintain primary coverage limits of $1 million per claim and $3 million annually for all claims. Excess liability coverage above this amount can be purchased from the new supplemental malpractice insurance program in limits of an additional $1 million per claim and $3 million per year for all claims.

The key benefits of our proposal are:

Stabilizes the market

During times when market prices for higher-risk providers and facilities climb rapidly and premiums become unaffordable, providers and facilities can voluntarily purchase excess liability coverage from the supplemental malpractice insurance program.

Lowers the cost of malpractice insurance

Our proposal will help doctors and health care facilities buy the coverage they need to stay in business. Some specialties may qualify for "rate relief." The program also will offer discounts to providers and facilities that implement proven safety programs that show results in protecting patients and reducing the likelihood of medical malpractice claims.

Voluntary program

Providers choose to use the supplemental malpractice insurance program when and if premiums become unaffordable.

Self-sufficient

Once capitalized and operational, the supplemental malpractice insurance program will be self-sufficient. The new program will have more stability than the current global reinsurance market because it will be funded by the premiums it collects. In addition, it will maintain its own reserves and judge its own risk.

Overseen by a six member Board of Governors

The Insurance Commissioner will appoint three members of the public and a person with relevant risk management experience to a Board of Governors. The Washington State Medical Association and the Washington State Hospital Association will appoint the final member. The Board will be responsible for general administration of the new program including setting rates, determining the high risk specialties that deserve rate relief and what patient safety programs qualify for premium discounts.

New reporting requirements

All medical malpractice insurers, risk retention groups, and self insurers will be required to report any judgment, settlement or additional claim information to the Insurance Commissioner. The data will be analyzed to determine the extent of the medical malpractice problem in Washington and what corrective action should be taken.

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