Report to the Iowa Insurance Division on its review procedures relating to
Medical Malpractice Rate Filings
Actuarial Review December, 2006
Pinnacle Actuarial Resources, Inc. 524 W. State St., Suite G Geneva, IL 60134
December 15, 2006 Ms. Angela Burke Boston Assistant Commissioner Iowa Insurance Division 330 Maple St. Des Moines, Iowa 50319-0065 Dear Ms. Boston: Enclosed is our final report regarding our review of the rate filing process of Medical Malpractice Liability Insurance filings at the Iowa Insurance Division. This study has been conducted by Pinnacle Actuarial Resources, Inc. in support of a special request by an insurance regulatory authority. We are available to meet with you or any other authorities related to this examination to discuss any matter contained in the report or affecting the examination. Sincerely,
Charles C. Emma, FCAS, MAAA Principal
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TABLE OF CONTENTS
I. INTRODUCTION ________________________________________________________ 3
Purpose _______________________________________________________________ 3 Distribution and Use _____________________________________________________ 3 Reliances and Limitations _________________________________________________ 3
II. STATE OF MEDICAL MALPRACTICE INSURANCE INDUSTRY_________ 4
Countrywide Experience___________________________________________________ 4 Iowa Experience ________________________________________________________ 5
III. EXECUTIVE SUMMARY _______________________________________________ 8
Conclusion ____________________________________________________________ 8 Recommendations_ ______________________________________________________ 8
IV. REVIEWED RATE FILINGS____________________________________________ 9 V. PINNACLE METHODOLOGY__________________________________________ 12 VI. EXHIBITS ____________________________________________________________ 13 VII. APPENDIX A ________________________________________________________ 14
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I. INTRODUCTION Purpose and Scope
Pinnacle Actuarial Resources, Inc. (Pinnacle) was retained by the Iowa Insurance Division (IID) to review IID’s rate filing review procedures over the time period from 1996-2005. We reviewed the procedures and practices used by the Division in order to determine whether these reviews met relevant standards and were conducted in a manner consistent with the provisions of Iowa Insurance Code 515F.4 and 515F.5. Pinnacle was directed by the IID to address both hospital and physicians/surgeons malpractice liability and to focus, in particular, on the impact on overall premium rate levels. This review, therefore, excluded any specialized healthcare services liability such as chiropractors, dentists, and ophthalmologists.
Distribution and Use
This study has been conducted in support of a special request by an insurance regulatory authority. This report does not represent a market conduct review.
Reliances and Limitations
We have relied upon data and information supplied by representatives of the IID. All of this data is also publicly available at the IID’s offices. The data included the following: • • • • • Rate Filings on file at the IID’s offices NAIC Report on the Medical Malpractice Insurance Market: “A Study of Market Conditions and Potential Solutions to the Recent Crisis” A Report Prepared by Mr. Jay Angoff : “Falling Claims and Rising Premiums in the Medical Malpractice Insurance Industry” Applicable Sections of the Iowa State Insurance Code “Statement of Principles Regarding Property and Casualty Insurance Ratemaking”, published by the Casualty Actuarial Society
We have reviewed the data provided to us for consistency and believe it to be reasonable and accurate. However, we have made no attempt to audit or verify this information. If it is determined at a later point in time that the underlying data is inaccurate, then the results herein will also contain inaccuracies. All of the attached exhibits should be considered an integral part of this report.
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II. STATE OF MEDICAL MALPRACTICE INSURANCE INDUSTRY
Countrywide Experience The medical malpractice insurance industry has undergone major shifts and dramatic trends since the late 1990’s. Among the phenomena affecting the market over that time include the following: Diminishing number of insurers offering coverage Increasing costs of coverage Decreasing availability of coverage Exiting of medical practitioners due to high insurance rates, particularly in some high risk practice areas such as Obstetrics/Gynecology Significant differences in the condition of the medical practice market between states Many studies have been conducted in order to ascertain the main drivers behind this crisis. They point to many possible forces, including the following: Competitive pricing Increasing claims experience Increasing healthcare costs Rising costs associated with jury awards and defense payments Declining investment yields Multiple solutions have been proposed by various interested parties. Tort reforms have been implemented in some states, such as caps on non-economic damages. Other solutions include special legislation, such as, “I’m Sorry” laws in certain states and encouragement of more frequent use of arbitration of malpractice cases. There is no real consensus on the true severity of the medical practice insurance crisis. Levels vary by state and can be attributed to many possible reasons. When an insurance sector undergoes such dramatic changes as medical malpractice has, much scrutiny is placed on the role of regulation. It should be noted that there are contrasting viewpoints regarding the potential impact of rate regulation on the medical malpractice insurance industry. In the section below we discuss a report published by Mr. Jay Angoff who is critical of regulators and alleges that regulators have allowed large profits through excessive rates. By complete contrast there is also widespread concern from other industry observers who note recent insolvencies and financial impairments of major malpractice insurers and question whether rate regulation has been sufficient to avoid inadequate rates. The “Angoff Report” Considerable debate has been created within the industry as to the extent of the medical malpractice crisis. A study commissioned by the Center for Justice & Democracy in 2005 published by Mr. Jay Angoff, claims that malpractice insurers have accumulated record amounts
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of surplus during the time period 2001-2004. He also states that malpractice insurers have simultaneously increased premiums while payments and projected claim payments have decreased. Unfortunately, this study relies on some badly flawed indicators of financial performance and it fails to consider the significant dynamics associated with the market displacement of many of the major malpractice carriers. The effect of the report’s poor choice of analytics is to have dramatized the effect on insurer profits on the swings in the malpractice market. Furthermore, by selecting a time period immediately following such a massive dislocation of insurance carriers, the findings are isolated and, as such, they fail to offer a fair, long-term view of the malpractice market. As such, we believe that the claims made in the Angoff report are wholly unreliable. Condition of Iowa Medical Malpractice Market Share Industry premiums written across the entire state of Iowa approximate $100 Million during 2005. Presently there are five carriers of significance which write medical malpractice in the State of Iowa. Below is a list of the five carriers with their 2005 market share of written premiums. Please note that this analysis specifically excludes NCMIC, a monoline writer of chiropractors professional liability. 1. 2. 3. 4. 5. Midwest Medical Insurance Company (MMIC) – 35.9% Physicians Insurance Company of Wisconsin (PIC-WI) – 15.0% Lexington Insurance Company (AIG subs.) – 9.9% Columbia Casualty Company (CNA subs.) – 4.6% Hudson Specialty Insurance Company – 4.1% Total Market Share of Top 5 – 69.4%
6. ISMIE Mutual Insurance Company (ISMIE) – 3.3% 7. AMCO Insurance Company (AMCO) – 3.0% 8. Medical Protective Insurance Company (MedPro) – 2.5% 9. Preferred Professional Insurance – 2.4% 10. American Casualty Insurance Company – 1.4% Total Market Share of Top 10 – 82.0% Largest Five, 1996-2005 It should be noted that the Top 5 insurers listed above includes some new names due to market dynamics. It is important to note that over the period of review in this study 1996-2005 the largest five writers – those whose filings we spent the majority of time reviewing – included the following list: • • • • Midwest Medical Insurance Company Physicians Insurance Company of Wisconsin Medical Protective ISMIE Mutual
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•
St. Paul Insurance
The Market Share of the Top 5 and Top 10 largest insurance writers over the period of study is shown in the table below. Market Share of Top 5 76.7% 78.2% 78.1% 71.3% 69.9% 71.9% 66.8% 73.6% 72.4% 69.4% Market Share of Top 10 87.3% 87.8% 88.2% 87.1% 85.6% 86.1% 82.4% 84.6% 84.9% 82.0%
Year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
The table above reveals a comparable level of concentration in the Iowa market to similar data from other states and from other lines of insurance. This comparative data is found in NAIC Report on the Medical Malpractice Insurance Market: “A Study of Market Conditions and Potential Solutions to the Recent Crisis”. In the insurance industry, low concentration is widely held to be indicative of appropriate levels of competition. Also, the stability of these indicators over time support healthy, competitive markets. The long-term trends in this data also lend support to the notion of sustained levels of competition in Iowa. Additionally, it should be noted, in the NAIC Report, the State of Iowa shows 10 carriers which have in excess of 2.0% market share. This number of insurers lies in the upper half among the rankings of all states. What the table above does not show is the effect of the significant displacement in the market created by the 2001 departure from the medical malpractice market of St. Paul Insurance. Through 2000 the St. Paul group accounted for approximately 30% of insurer premiums. St. Paul’s countrywide withdrawal in 2001 sparked a reshuffling of policyholders to many of its competitors. However, amid the displacement, Iowa’s market share concentrations did not change materially. Additionally, states with smaller populations, such as Iowa, tend to have higher concentrated markets due to lower levels of demand. Financial Performance Published financial data for the five largest predominantly-Iowa carriers (in the list on previous page) shows calendar year loss ratios which approximate the industry. The following table compares four of these companies’ (excluding departed, St. Paul) loss ratios to that of the broader medical malpractice insurance industry
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Direct Loss & LAE Ratio Data by Major Carriers Accident Year 2001 2002 2003 2004 2005 Medical PIC-WI Protective 111.6% 121.2% 89.7% 99.2% 93.7% 81.1% 86.8% 79.2% 83.1% 75.1% Countrywide Industry 135.2% 106.5% 89.6% 82.3% 77.9%
MMIC 108.3% 111.8% 88.1% 73.8% 72.9%
ISMIE 133.5% 127.4% 96.8% 80.1% 87.5%
It should be noted that Iowa has no caps on its malpractice awards. This makes year-to-year direct loss ratios generally more volatile when compared to other states. Nonetheless, from the loss ratio comparison above it appears that the experience of Iowa’s major medical malpractice carriers has reasonably approximated that of the malpractice insurance industry across all states. It can be inferred from the movement in these ratios from year-to-year that Iowa rate regulation has had no unique or constraining effect on rates which would result in different ratios than those derived from the aggregate experience of multiple states. Overall, the Iowa medical malpractice insurance market appears stable and competitive with an appropriate level of market concentration among several insurers. No patient compensation funds are in place and, despite Iowa legislation which allows for it, no JUA has been set up to date.
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III. EXECUTIVE SUMMARY Conclusions
Overall we conclude that the rate regulatory process used by the Iowa Insurance Division for reviewing medical malpractice rate filings complies with appropriate actuarial standards and appears consistent with the provisions of the Iowa State Code for rates effective in the time period 1995-2005. We base this conclusion primarily on our review of the rate filings, our interview of IID’s actuary, Ms. Ramona Lee, and our examination of the relevant Iowa statutes and actuarial standards. Furthermore we believe that market concentration and loss ratio experience of Iowa’s major carriers suggest that rate regulation in Iowa has not resulted in uniquely excessive or inadequate rate levels and has not affected the carriers’ ability to realize appropriate rate action as major market dynamics have occurred.
Recommendations
While the review process currently in place at IID appears sufficient to meet the Division’s goals, IID may wish to consider a few areas where it could improve this process: Building-in a formal reserve adequacy factor to its review of company rate filings [1] Monitoring, through a formal report process, the approved rate level changes for each carrier Monitoring rates, by specialty, across carriers Using industry actuarial benchmarks for medical malpractice, such as ISO loss costs and trend assumptions
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[1] – As an example, one could use successive adequacy ratios deduced from Schedule P – Part 2 which would may offer insight as to the historical adequacy of the IBNR a company shows in its filings. Specifically, the one-year or two-year development ratios to earned premium can be used to adjust the company’s IBNR.
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IV. RATE FILINGS Historical Rate Changes
Given the competitive regulatory environment in Iowa, insurers are not required to provide actuarial justification for rate changes. Of all the filings we reviewed none of the filings were prepared by actuaries who were employed by the company. Only one of the carriers provided ongoing actuarial analysis from an outside firm. Most of the filings we reviewed didn’t provide formal actuarial analyses. Average rate changes have varied significantly over the years subject to this study. While there is a fair degree of variation by company, the overall annual base rate changes for Hospital and Physicians/Surgeons liability have approximated 6% over the ten years of concern for this study. Additionally, over the past four years the annual rate increases have been approximately 12% annually. These annual rate change levels appear to approximate that of the medical malpractice industry.
Rate Filing Process
Below we list important observations which we gained from our review of the underlying filings and our discussions with IID’s actuary, Ramona Lee. Ms. Lee is an Associate of the Casualty Actuarial Society (ACAS) and has been employed by the IID as its only credentialed casualty actuary since 1998. The CAS promulgates the “Statement of Principles Regarding Property/Casualty Insurance Ratemaking”. These principles are generally consistent with the rating laws of most states in that they outline the importance that rates not be excessive, inadequate, or unfairly discriminatory. This statement also includes a list of important considerations an actuary should take into account when developing and evaluating premium rates. Our review of the notes and statements made by Ms. Lee focused on their consistency with this document, referred to as the “Statement of Principles”. Below we list important observations which we gained from our review of the underlying filings and our follow-up discussions with Ms. Lee. o Iowa law requires rates not to be inadequate, unfairly discriminatory, or excessive. However, there are no requirements such as actuarial justification behind rates changes or profit load. Some states require return on equity (ROE) models underlying filed profit loads and specifically request actuarial justification for rate changes. Class rate relativities are generally not the focus of the review. o In general, IID looks for some higher-level indicators in the filing such as the rate level requested and the severity trend used. This would serve as an initial check for determining if additional examination and testing may be necessary.
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o Historically, approximately 1% of all medical malpractice filings have been disapproved. Approximately 10% have been sent back for clarification or better information. In most cases a company’s indicated rate change shown on a particular filing approximates its proposed rate change. o No significant changes have been made to the review process since 1998 when Ms. Lee joined IID. The evaluations made by Ms. Lee rely predominantly on general industry knowledge, including actuarial bulletins, local and national news registers, actuarial forums, insurance trade journals, and relevant Internet publications and data. o The Division has not adopted a formal or standardized “checklist”. Judgment, guided by a seasoned knowledge of the industry’s conditions, is critical to IID. The Division’s actuary does not have a set of benchmarks for profit load. Instead the profit load varies based on their judgment as to current economic factors , the state of industry, and the company financial condition. o Few companies prepare filings using only their own data. The vast majority of Iowa licensed companies use “me-too” filings based on larger carriers. Because of the volatility of Iowa data, countrywide data is often deemed appropriate by IID in its evaluation of a company’s indication. o No consideration of a company’s reserve adequacy factors enters the review process. IID is more focused on resultant rates than on the methodology or process. Assumptions which are not material in determining the overall rate level are not reviewed. o IID staff does its best to avoid recognizing the name of the company on the filing in order to avoid making judgments before the analysis is presented. Overall IID appears to have sufficient expertise within in its staff to conduct the reviews of the filings. o IID also relies on peer review provided by staff experts in other matters where necessary. For example, Ms. Lee may consult internally with IID’s health insurance actuary if broader health insurance assumptions need to be reviewed. o According to Ms. Lee, premium rates can vary dramatically among insurers making comparisons between companies difficult as factors such as type of business, market segments vary greatly. o The normal time frame for review of a filing is 30 days. It can be extended an additional 15 days but IID normally finishes within 5 days. Iowa has a “Deemer” provision where if no action by the IID occurs 30 days after a filing is made, the filing is deemed approved.
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o IID regular monitors a company’s reserve position to balance concerns over rate levels and solvency. o IID conducts the review process on the merits of each filing in order to promote prospective ratemaking. Consideration of any degree of recovery for prior year underwriting losses is not permitted by IID. We reviewed these filings and these interview notes to compare them to the Statement of Principles and the relevant Iowa statutes. As stated in our Executive Summary section we believe that the review procedures and overall considerations used by IID are consistent with these documents.
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V. PINNACLE METHODOLOGY Elements of Analysis
Our analysis included an analysis of the historical rate changes and market conditions in the State of Iowa. In conducting this review Pinnacle performed the following tasks: • • • Conducted an initial meeting with IID officials to confirm scope, available resources, and organization of filings Reviewed rate filings of major carriers which were publicly available at IID offices Conducted an on-site interview with IID actuary, Ramona Lee to accomplish two objectives: o to learn more about matters within these filings, and o to increase our overall understanding of IID’s rate review process • • Analyzed relevant data industry data and reports Reviewed published financial data from malpractice major carriers in Iowa
Once these items were synthesized our conclusions were discussed and laid out based on the viewpoints of the two actuaries assigned to this project. The report was drafted and then peer reviewed. A draft was presented to IID for their commentary.
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VI. EXHIBITS
Exhibit 1: Market Share exhibit Exhibit 2: Rate changes by year, by company
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Iowa Medical Malpractice - Historical Market Share 1996 1997 1998 1999 2000 2001 2002 2003 2004 Direct Direct Direct Direct Direct Direct Direct Direct Direct Premiums Market Premiums Market Premiums Market Premiums Market Premiums Market Premiums Market Premiums Market Premiums Market Premiums Market Written Share Written Share Written Share Written Share Written Share Written Share Written Share Written Share Written Share 11,474,556 26.7% 13,787,809 32.7% 15,106,992 35.0% 15,921,847 33.8% 15,758,681 30.7% 20,511,326 33.0% 23,618,915 32.8% 28,042,428 33.4% 35,343,479 35.5% 0.0% 0.0% 0.0% 15,152 0.0% 235,676 0.5% 3,764,527 6.1% 10,550,687 14.6% 17,599,313 20.9% 19,470,281 19.6% 0.0% 0.0% 0.0% 58,194 0.1% 197,171 0.4% 5,378,346 8.7% 6,583,513 9.1% 8,319,711 9.9% 9,850,045 9.9% 24,899 0.1% 49,169 0.1% 18,791 0.0% 0.0% 22,945 0.0% 3,681 0.0% 42,240 0.1% 488,204 0.6% 499,278 0.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2,837,613 2.9% 0.0% 0.0% 6.5% 2.2% 1.1% 1.9% 0.8% 0.0% 0.0% 0.0% 0.9% 0.9% 0.0% 1.1% 0.0% 2.1% 0.0% 0.5% 0.0% 2.8% 1.4% 0.0% 0.0% 0.0% 0.4% 0.0% 0.0% 1.2% 0.2% 0.5% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.2% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 5.9% 0.8% 1.7% 1.8% 0.7% 0.0% 0.0% 0.0% 0.1% 0.9% 0.0% 1.2% 0.0% 4.2% 0.0% 0.5% 0.0% 2.7% 1.4% 0.0% 0.0% 0.0% 0.2% 0.0% 0.0% 0.9% 0.2% 0.5% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.1% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 5.4% 1.0% 2.0% 1.8% 0.6% 0.0% 0.0% 0.0% 0.6% 1.1% 0.0% 1.2% 0.0% 4.1% 0.0% 0.5% 0.0% 2.7% 1.2% 0.0% 0.0% 0.0% 0.2% 0.0% 0.1% 0.4% 0.2% 0.5% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.1% 0.2% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 4.5% 4.7% 1.8% 1.8% 0.6% 0.0% 0.0% 0.0% 0.1% 1.0% 0.0% 1.0% 0.0% 2.7% 0.0% 0.4% 0.0% 2.6% 0.8% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 2.5% 0.2% 0.5% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.1% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 5.3% 4.5% 1.7% 1.7% 0.6% 0.0% 0.1% 0.0% 0.3% 1.2% 0.0% 1.0% 0.0% 2.3% 0.0% 0.4% 0.0% 1.9% 0.8% 0.0% 0.0% 0.0% 0.2% 0.0% 0.1% 6.1% 0.3% 0.4% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.2% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 3.1% 4.8% 3.6% 1.3% 1.5% 0.9% 0.0% 0.1% 0.0% 0.4% 1.2% 0.0% 0.8% 0.0% 2.3% 0.0% 0.4% 0.0% 1.9% 0.8% 0.0% 0.0% 0.0% 0.1% 0.0% 0.1% -0.5% 0.3% 0.4% 0.1% 0.0% 0.2% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.2% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 19.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 2.9% 4.7% 5.6% 1.3% 1.4% 1.0% 0.0% 0.2% 0.0% 0.3% 2.3% 0.0% 0.7% 0.0% 0.6% 0.0% 0.5% 0.0% 2.8% 0.6% 0.5% 0.0% 0.0% 0.3% 0.0% 0.1% 0.4% 0.6% 0.3% 0.1% 0.0% 0.2% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.3% 0.0% 0.0% 0.0% 0.0% 0.2% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 3.5% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 3.5% 5.9% 2.8% 1.3% 1.3% 1.0% 0.0% 0.3% 0.0% 0.8% 1.7% 1.0% 0.7% 0.0% 0.5% 0.0% 0.4% 0.4% 1.6% 0.5% 0.9% 0.0% 0.0% 0.3% 0.0% 0.2% 0.4% 1.7% 0.3% 0.2% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.1% 0.3% 0.0% 0.0% 0.0% 0.2% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 3.2% 0.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 3,524,757 3,152,030 3,829,035 2,216,768 1,304,377 1,163,632 1,485,920 397,609 928,048 561,535 1,273,866 932,044 769,611 3.5% 3.2% 3.8% 2.2% 1.3% 1.2% 1.5% 0.0% 0.4% 0.9% 0.6% 1.3% 0.9% 0.8% 0.0% 0.6% 0.0% 0.4% 2.8% 0.6% 0.5% 0.2% 0.5% 0.0% 0.3% 0.3% 0.2% 0.5% 0.5% 0.3% 0.2% 0.2% 0.0% 0.0% 0.0% 0.1% 0.0% 0.1% 0.1% 0.1% 0.3% 0.0% 0.0% 0.0% 0.1% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Cocode 16942 23400 19437 31127 37079 32921 19100 11843 36234 20427 15865 10677 11832 38954 10328 26387 35378 24856 14460 10210 20443 11860 44121 21199 34495 22810 37362 12015 33111 44083 19720 22667 19445 34487 13714 13893 33138 22829 35637 34452 10179 18767 44105 25143 39020 20079 11127 21857 10232 13196 16535 23809 11798 12203 11941 10752 10801 24767 11710 27960 16624 25658 34207 24732
Company Name Midwest Medical Ins Co Physicians Ins Co Of WI Lexington Ins Co Columbia Cas Co Hudson Specialty Ins Co ISMIE Mut Ins Co Amco Ins Co Medical Protective Co Preferred Professional Ins Co American Cas Co Of Reading PA NCMIC Ins Co Cincinnati Ins Co Health Care Industry Liab Recip Ins Pronational Ins Co Capitol Specialty Ins Corp Steadfast Ins Co Evanston Ins Co Admiral Ins Co Podiatry Ins Co Of Amer A Mut Co United Medical Liability Ins Co RRG Continental Cas Co Copic Ins Co Oms Natl Ins Co Rrg Arch Speciaity Ins Co Doctors Co An Interins Exchn Chicago Ins Co General Star Ind Co Emergency Medicine RRG Inc MHA Ins Co Preferred Physicians Medical RRG American Alt Ins Corp Ace American Ins Co National Union Fire Ins Co Of Pitts Professional Undrwtrs Liab Ins Co Pharmacists Mut Ins Co Community Blood Cntr Exch RRG Landmark Amer Ins Co Interstate Fire & Cas Co Landmark Ins Co Homeland Ins Co of NY Red Mountain Cas Ins Co Inc Church Mut Ins Co Ophthalmic Mut Ins Co RRG State Farm Fire And Cas Co Essex Ins Co National Fire & Marine Ins Co Professional Solutions Ins Co American Ins Co American Assoc Of Othodontists RRG Western World Ins Co Zurich American Ins Co Granite State Ins Co Continuing Care RRG Inc James River Ins Co Green Hills Ins Co RRG Novus Ins Co RRG Fortress Ins Co St Paul Fire & Marine Ins Co Allied Professionals Ins Co RRG Illinois Union Ins Co Darwin Natl Assur Co Travelers Ind Co Westport Ins Corp General Ins Co Of Amer
Exhibit 1 2005 Direct Premiums Market Written Share 37,304,079 35.9% 15,564,444 15.0% 10,262,808 9.9% 4,767,082 4.6% 4,295,823 4.1% 3,447,264 3,144,476 2,565,938 2,509,300 1,429,156 1,355,488 1,263,549 1,224,015 1,211,058 1,200,450 1,167,771 1,094,036 1,046,510 982,582 653,501 570,556 543,410 526,181 444,918 441,187 383,937 383,246 380,883 358,307 334,329 314,954 314,830 305,273 293,420 268,212 252,356 178,630 142,091 130,882 108,425 95,784 80,224 69,453 61,490 60,238 59,271 54,367 47,543 44,446 41,629 39,906 31,546 28,252 21,160 20,068 17,878 17,073 11,851 11,181 11,000 9,899 7,184 3,148 3,061 3.3% 3.0% 2.5% 2.4% 1.4% 1.3% 1.2% 1.2% 1.2% 1.2% 1.1% 1.1% 1.0% 0.9% 0.6% 0.5% 0.5% 0.5% 0.4% 0.4% 0.4% 0.4% 0.4% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.2% 0.2% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
2,786,399 934,803 478,539 816,132 329,719
2,475,349 319,841 731,789 747,281 302,696 6,158
2,320,266 416,088 875,429 793,821 274,714
2,103,412 2,200,061 847,487 858,140 270,575
2,723,317 2,316,506 860,382 853,784 321,023 26,852
1,937,553 3,007,696 2,238,606 807,631 928,217 562,102 72,375
2,060,063 3,419,971 4,002,333 940,758 1,020,549 693,045 152,948
2,975,329 4,979,988 2,353,582 1,061,515 1,113,715 837,611 220,612
377,744 389,580 469,698
30,349 394,549 517,682
253,204 459,045 529,776
32,522 487,242 466,250
149,242 596,715 501,056
254,931 717,012 490,580
224,078 1,686,502 530,383
650,829 1,425,498 879,250 628,020
891,822 222,190 1,205,835 593,701
1,781,703 217,762 1,119,149 608,995
1,761,806 201,368 1,183,059 523,796
1,279,215 206,736 1,219,644 389,920
1,177,755 206,422 958,130 428,086
1,428,681 229,663 1,172,287 510,645
441,110 346,239 2,007,019 413,881 391,453
456,169 367,849 357,650 1,325,555 381,584 772,063
563,953 427,423 2,780,757 605,734 463,468 151,884 451,086 314,470 320,816 163,293 451,752 449,249 260,169 207,305 153,315 7,213
157,171
95,278
76,080
46,750
79,602
64,011 3,430 70,081 (310,810) 169,514 235,136 42,531 101,980
248,033 16,919 102,029 284,584 413,641 243,815 55,237 131,404
292,346 11,905 156,743 340,615 1,407,383 251,594 181,239 79,475 22,360
504,735 82,971 202,638 23,614
7,987 372,136 67,404 204,051 35,240
40,902 187,503 67,381 213,309 44,800 18,378
12,366 1,180,822 94,438 221,012 35,486 17,504
60,892 3,122,143 130,341 228,044 38,990 20,936
8,077 46,085
12,939 42,626
14,888 45,302
7,865 36,299
5,110 42,390
7,537 47,613 130,296
10,980 62,814 247,980
16,249 59,108 62,321 232,000 36,127 35,358 130,854
70,181 33,395 75,311 59,341 77,116 262,240 15,856 49,200 42,428 59,377
25,647 67,940
27,168 55,307 14,327 31,651
28,631 45,516 100,640 35,017
28,978 69,355
30,963 80,737
30,147 70,529
4,223 34,340 115,448
31,401
31,198
31,495
34,607
50,440
57,338
68,564 34,826 18,080 16,940
13,333,575
0.0% 0.0% 31.1% 11,572,067 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
0.0% 0.0% 27.4% 11,669,618 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
0.0% 0.0% 27.0% 10,578,468 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
0.0% 0.0% 22.4% 11,391,987 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
0.0% 0.0% 22.2% 11,983,927 0.0% 0.0% 0.0% 0.0% 0.0% 0.1%
2,540,314
2,706,310 249,071
15,133 23,618 8,813 17,045 4,814 12,597 9,323
(385)
9,080
3,105 22,703
1,473 43,253
6,509 49,004
13,971 6,611
18,059 5,100
Iowa Medical Malpractice - Historical Market Share 1996 1997 1998 1999 2000 2001 2002 2003 2004 Direct Direct Direct Direct Direct Direct Direct Direct Direct Premiums Market Premiums Market Premiums Market Premiums Market Premiums Market Premiums Market Premiums Market Premiums Market Premiums Market Written Share Written Share Written Share Written Share Written Share Written Share Written Share Written Share Written Share 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 1,469 0.0% 3,042 0.0% 3,688 0.0% 0.0% 0.0% 0.0% 0.5% 0.0% 0.4% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 9.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 114,139 0.3% 0.0% 0.0% 0.0% 0.4% 0.5% 0.0% 0.0% 0.0% 0.2% 0.0% 0.0% 0.0% 1.7% 0.0% 3.4% 0.0% 0.0% 0.0% 0.2% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.5% 0.0% 0.4% 0.1% 0.0% 0.1% 0.0% 0.1% 0.0% 8.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.2% 0.0% 0.2% 0.0% 0.0% 0.0% 1.4% 0.4% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 2.1% 0.0% 1.1% 0.0% 0.0% 0.0% 0.4% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.2% 0.0% 0.4% 0.1% 0.0% 0.0% 0.0% 0.0% 0.2% 6.7% -0.1% 0.0% 0.0% 0.0% 0.0% 0.5% 0.0% 0.1% 0.0% 0.0% 0.0% 1.2% 0.4% 0.0% 0.0% 0.0% 0.1% 0.0% 0.0% 0.1% 2.2% 0.0% 0.3% 0.0% 0.0% 0.0% 0.2% 0.1% 0.4% 0.0% 0.1% 0.0% 0.0% 0.0% 0.3% 0.1% 0.0% 0.0% 0.0% 0.0% 0.1% 0.9% 0.4% 0.1% 0.0% 0.0% 0.0% 0.0% 0.5% 5.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.5% 0.0% 0.1% 0.0% 0.0% 0.0% 5.3% 0.3% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 3.5% 0.2% 0.0% 0.0% 0.0% 0.0% 0.1% 0.1% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 51,344,540 0.0% 0.0% 0.0% -0.1% 0.9% 0.3% 0.2% 0.0% 0.3% 0.2% 0.2% 0.6% 4.3% 0.1% 0.0% 0.0% 0.0% 0.0% 0.5% 0.0% 0.1% 0.0% 0.0% 0.1% 5.7% 0.5% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2.7% 0.2% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 62,079,611 295,925 6,159 469,771 177,440 137,036 25,010 (827) 405,720 89,777 390,615 2,032,139 74,414 0.5% 0.0% 0.0% 0.0% 0.8% 0.3% 0.2% 0.0% 0.0% 0.7% 0.1% 0.6% 3.3% 0.1% 0.0% 0.1% 0.0% 0.0% 0.2% 0.0% 0.1% 0.0% 0.0% 0.0% 1.2% 0.3% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 72,085,105 358,215 22,473 97 868,979 215,483 399,126 184,942 2,915,393 257,658 682,605 555,739 76,052 0.5% 0.0% 0.0% 0.0% 1.2% 0.3% 0.6% 0.3% 0.0% 4.0% 0.4% 0.9% 0.8% 0.1% 0.0% 0.3% 1.8% 0.2% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 84,069,177 486,049 642 859 1,236,605 192,413 143,218 (116,673) (125,294) 541,075 125,962 46,398 11,696 1,240 (66,085) 0.6% 0.0% 0.0% 0.0% 1.5% 0.2% 0.2% -0.1% 0.0% -0.1% 0.6% 0.1% 0.1% 0.0% 0.0% -0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 99,506,659 461,194 1,247 395 425,000 224,498 79,149 54,043 2,644 (793) (30,419) 0.5% 0.0% 0.0% 0.0% 0.4% 0.2% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
Cocode 21881 35181 19380 21873 25674 34916 22217 25534 44792 20478 22977 25445 33006 24791 42811 37338 41807 10903 40991 41750 39993 18279 18864 27138 23906 12246 24422 10355 29785 33189 34266 43117 21970 39640 35718 41521 35289 38970 26522 19429 24481 40592 20702 24430 20010 25123 33812 27189 26883 35904 11460 23817 37656 28665 29548 22713 24457 Total
Company Name National Surety Corp Executive Risk Ind Inc American Home Assur Co Firemans Fund Ins Co Travelers Property Cas Co Of Amer First Specialty Ins Corp Gulf Ins Co TIG Ins Co Executive Risk Speciality Ins Co National Fire Ins Co Of Hartford Lumbermens Mut Cas Co TIG Specialty Ins Corp American Physicians Assur Corp St Paul Mercury Ins Co Gulf Underwriters Ins Co Pacific Ins Co Royal Surplus Lines Ins Co American Excess Ins Exchange RRG Kemper Ind Ins Co St Paul Medical Liability Ins Co Colony Ins Co Bankers Standard Ins Co Fairmont Ins Co Kemper Cas Ins Co Northwestern Natl Cas Co American Continental Ins Co Legion Ins Co Reciprocal Alliance RRG NN Ins Co Monticello Ins Co Frontier Ins Co American Equity Ins Co OneBeacon Ins Co Firemans Fund Ins Co Of OH Phico Ins Co St Paul Prop & Cas Ins Co Continental Ins Co Markel Ins Co Mount Vernon Fire Ins Co Insurance Co Of The State Of PA Reliance Ins Co Of IL Reliance Natl Ins Co Ace Fire Underwriters Ins Co Reliance Natl Ind Co Acceptance Ind Ins Co Dependable Protective Mut RRG Inc Reciprocal of America Associated Intl Ins Co American Intl Specialty Lines Ins Co Health Care Ind Inc Homestead Ins Co Illinois Natl Ins Co Anesthesiologists Pro Assur Co Cincinnati Cas Co Western Ind Ins Co Insurance Co Of North Amer Reliance Ins Co
Exhibit 1 2005 Direct Premiums Market Written Share 2,911 0.0% 2,772 1,468 1,174 (35,860) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0%
200,507
221,706
71,700
40,343 436,700 179,488 32,078 16,952 15,499
372 (27,391) 464,815 150,180 79,156 20,841 161,459 103,038 125,472 288,762 2,225,795 41,867
179,427 10,336 45,587
184,969 32,698 22,484
193,605 29,920 148
40,602 3,368,692 31,213
3,858,704 49,316 562
(8,889) 84,214 2,894,644 (21,732)
15,612 224,849 2,411,524 8,274 1,075 2,500
2,600 18,910 263,577
75,554 7,627 98,629
72,715
219,560
251,619
250,005 1,318,860 164,938 87,189 13,280 3,306 1,262 242 (678)
101,615
50,401
37,657
30,122 1,000 31,819 2,916,908 246,933 39,656 8,760 17,084
32,746 163 6,241 725,648 197,423 55,607 22,376 3,718 1,355 108 (548) (2,116)
4,721 160,821 216,905 11,071 15,382 99,043
4,840 579,340 183,061 5,704 8,727 42,363
19,473 537,806 188,604 1,782 8,648 34,495
18,002 2,519,402 122,322 20,742 1,782 8,648 23,569
15,215 1,636,283 94,895 19,460 7,579 743 69,385 56,478 53,126 33,181 18,839 7,135 6,277 4,180
15,548 1,372,150 91,558 5,979 2,500 2,228 743
6,158 708,645 100 1,463,045 5,000 1,238 97,351 47,675 44,839
(13,245) 870,096 101 480,923
32,540 963,394
110,293
814 168,245 42,756 53,428
1,018 84,139 54,721 155,722 18,224 34,324 1,672
13,600 37,926
20,000 41,990 600
1,327 112,601 25,926 964
14,034 78 38,381 8,833 335 42,932,845
0.0% 5,000 0.0% 3,406 0.0% 78 0.1% 0.0% 0.0% 100.0% 42,203,383
0.0% 205 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 43,216,649
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 47,154,159
0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 103,985,474
Iowa Medical Malpractice - Summary of Filings Reviewed Filing Number Indicated Rate Change
Exhibit 2
Company Name ACE American Insurance Co ACE American Insurance Co ACE American Insurance Co Amco Insurance Company American Alternative Insurance Company
Effective Date 2/17/2004 12/15/2001 10/15/2000 No relevant filings 1/12/2005 No relevant filings; All MedMal Filings relate to Nurses Anesthetist Professional Liability Program or School Policy for Healthcare Provider Students Program
Practice Area Medical Malpractice Allied Health Program Allied Health Professional and Supplemental Liability Ins Allied Health Professional Liability
Proposed Rate Change 45.7% -13.7% does not specify
Actuarial Support Some Exhibits showing impacts A few summary Exhibits
Current Base Rate
Hospice Program
28.1% 84.7% or 81.7%
Some Exhibits showing payment assumptions and impacts
American Casualty Co of Reading PA
American Physicians Assurance Corporation Chicago Insurance Company Cincinnati Insurance Company Cincinnati Insurance Company Cincinnati Insurance Company
3/22/2001
Hospital Liability
15.0% 11.3% 0.1% 78.6% 7.9%
The letter says actuarial documentation is enclosed but I don't 64.89% see it. 119.90% Some Selections and Assumptions No Yes, some statistics and selections Yes, some statistics and selections
5/1/2006 SERFF Miscellanwous Therapists (might not be relevant) 1/1/2003 PRO-02-450Professional Liability 1/1/2004 PRO-03-450Professional Liability 9/1/2004 PRO-04-450Professional Liability
Continental Casualty Company Continental Casualty Company Continental Casualty Company Continental Casualty Company Continental Casualty Company Continental Casualty Company Continental Casualty Company Continental Casualty Company Continental Casualty Company
5/24/1996 7/25/1996 4/7/1998 4/2/1997 8/1/1996 10/22/1998 1/1/2004 1/1/2002 7/1/2004 SERFF
Professional Liability Psychiatrist Professional Liability Professional Liability Hospital Professional Liability Hospital Professional Liability Hospital Professional Liability Allied HealthCare Facilities PL Physicians and Surgeons Hospital
0.0% New Program Adding Occ Cov to physician's program 0.0% 0.0% 0.0% 42.2% 81.3% was not clear 149.3%
No Yes, some work with CW data No
No Yes, uses Pure Prem from MMIC (Not sure if it is sufficient) Based off of St. Paul's rate level
COPIC Insurance Co Fireman's Fund Fortress Insurance Company General Insurance Company of America Gulf Insurance Company
1/1/2004
Physicians and Surgeons D&O, GL, Dentists professional Physician Professional Liability Podiatrist Plus Professional Liability Podiatrist Professional Liability
Initial Rate and Form Filing
4/1/2003 3/1/2001 1/1/2004 SERFF
0%? 0.0% 35.1% 35.10% Some Selections and Assumptions Rates from other approved filings were referenced. Those files were referenced but their underlying data was not displayed. Yes, goes through their selections and thought process, but no data to 75.20% back it up.
ISMIE Mutual Insurance Company
1/1/2004
2935 Physician Professional Liability
New Rate & Rule Filing
8272
ISMIE Mutual Insurance Company
7/29/2005
Professional Liability
34.8%
ISMIE Mutual Insurance Company(cont)
ISMIE Mutual Insurance Company(cont)
Iowa Medical Malpractice - Summary of Filings Reviewed Filing Number Indicated Rate Change
Exhibit 2
Company Name
Effective Date
Practice Area
Proposed Rate Change
Actuarial Support
Current Base Rate
Midwest Medical Insurance Company
1/1/2003 2002-7
Healthcare Systems Liability (hospital program)
15.0%
Based off of Current St. Paul and MMIC rates and IA Hospital PL Exposure (Exh 2)
413
Midwest Medical Insurance Company Midwest Medical Insurance Company
1/1/2003 2002-6 1/1/2004 2003-4
Physicians and Surgeons Liability Healthcare Systems Liability (hospital program)
10.0% 12.0%
Midwest Medical Insurance Company
1/1/2004 2002-3
Physicians and Surgeons Liability
13.2%
Midwest Medical Insurance Company Midwest Medical Insurance Company
1/1/2005 2004-3 4/1/2004 2004-2
Healthcare Systems Liability (hospital program) Physicians and Surgeons Administrative Defense Cov
6.5%
Yes (But maybe not to the extent we would like), see Exhibits from Bickerstaff, Whatley, Ryan, & Based on Rate Class/Maturity Year 8.10% Burkhalter Based on St. Paul's 1/1/02 Filing Yes (But maybe not to the extent we would like), see Exhibits from Bickerstaff, Whatley, Ryan, & Based on Rate Class/Maturity Year 13.20% Burkhalter Based on MMIC's IA 100K/300K experience, MMIC's IA 1M/3M experience, and St. Paul's 1/1/02 Filing 0.00% No
Midwest Medical Insurance Company
1/1/2006
Physicians and Surgeons
-6.3%
-9.30% Yes, Some triangle and Dev't work Bickerstaff & Whatley conducted an independent rate review; reason fo increase was due to the increase in severity; the entire actuarial report wasn't provided with the filing, just the summary level exhibits from the actuarial report. As a result, there is no actuarial support for the increased severity. The DOI didn't request Not obvious 7.80% futher exhibits. Original filing submitted didn't include any rates, it just said that it was a new program for a-rated accounts; actuary requested additional support proving that rates aren't excessive, inadequate or unfairly disriminatory; as a result, MMIC provided average rates by class code it appears MMIC wanted to include a provision in the rate manual for arated accounts- it is unclear to what line of business the filing is applicable na filing changed the minimum premium downward for ancillary fees; no support requested or probably needed na Bickerstaff & Whatley actuarial analysis was not provided to IA in its entirety- supporting exhibits not provided; as a result, unable to tell if the 14% increase is warrantedexplanatory memo attributes rate increase to the increasing loss and alae severity 14.7% increase statement of income provided for years 1995-2000; still doesn't explain why the revised rates aren't inadequate, excessive or unfairly discrimnatory not shown Bickerstaff & Whatley actuarial analysis didn't include supporting exhibits showing selections that 5,512 (100k/300k) limits 7.80% might affect the rate indication
MMIC MMIC
1/1/2001 2000-02 219Physician & Surgeons Rate Filing 4/8/2002 IA2002-01 Healthcare Facility General Liability- N/A
5.0%
MMIC
Healthcare Facility Professional Liability- not sure if this would fall under Hospital Professional 8/1/2002 IA2002-03 Liability
new program
MMIC
9/1/2002 IA2002-05 Not Sure
na
MMIC
not sure
IA2002-01 appears to be professional liablity
na
MMIC
1/1/2002 IA2001-02 Physicians & Surgeons Liability
14% increase
MMIC
1/1/2002 IA2001-03 Hospital professional & general liability rates
20% increase
MMIC
1/1/2001 IA 2000-02 Physicians & surgeons Liability
5% increase
Iowa Medical Malpractice - Summary of Filings Reviewed Filing Number forms filing Indicated Rate Change na
Exhibit 2
Company Name MMIC
Effective Date 1/1/2000
Practice Area na
Proposed Rate Change
MMIC MMIC
1/1/2000 IA99-01 11/15/1999
Physician & Surgeons Rate Filing health care organization liability policy-out of project scope
8.0%
Actuarial Support change in coverage but no rate change Bickerstaff & Whatley actuarial analysis didn't include supporting exhibits showing selections that 11.80% might affect the rate indication
Current Base Rate
MMIC
1/1/1999 98-05
Professional Liability Insurance-forms & rule filing
na
na
MMIC MMIC MMIC
1/1/1999 98-03 1/1/1999 98-04 8/15/1998 98-02
Physicians & Surgeons Liability Ancillary Health Care Providers Rate/Rule-out of project scope Physicians & Surgeons Liability
-2.0%
no rate change but the rules provided new deductible credit ranges; Ramona asked for additional support behind the ranges-ranges appear to be based on judgment for varying levels of # of doctors & exposures rate filing changes only anesthesiology due to changes in 5.20% class specialty
na-change in experience and schedule rating plan reason for rate change: continue increasing in severity and alae; in order to be able to determine if the ultimate loss projections and rate increase are appropriate, a significant amount of additional testing will be needed given that the format of the analysis doesn't provide detail such as ldf's.Historical loss triangles are provided someone would need to recreate the triangles, however, to caluclate ldf's. No selected ldf's are shown. broadening of coveragee allowing medical directors coverage for each physician/entity includes rate revision and changes in relativity factors for Emergency Physicians, Anthesiolgists, & General Surgeons; will need to go back to review appropriateness of new relativity factors based on the Bickerstaff/Whatley report; it is difficult to determine the reasonableness of the proposed rates as it is unclear at this time in the project to understand how the actuary developed ultimate pure premiums; will need to go back through analysis putting together independent exhibits; no documentation in the file regarding 6.30% DOI actuarial questions or testing change in risk management credits NE physicians carry limits of 200/600, as is required by NE hospitals; most IA hospitals require limits of $1M/$3M; MMIC wants to offer coverage $800K xs $200K for those NE physicians practicing in IA on a limited basis; IA actuary Kevin Conley, requested that the rates shown have a pro-rata provision reflecting the part-time schedule of the NE physicians-MMIC revised their rate pages to reflec this request
MMIC MMIC
1/1/1998 97-01 1/1/1997 97-02
Physicians & Surgeons Liability Managed Care
10.0%
MMIC
1/1/1997 97-01
Form & Corporate Premium Rule Change
No rate change
MMIC MMIC
1/1/1996 95-05 9/1/1995 95-02
Physician Specialties & paramedical classes Physicians & Surgeons Liability
opening letter says 6.3%; transmittal form says 9.1% no rate change
MMIC
2/15/1995
Physicians & Surgeons Liability-excess liability for NE practioners practicing in IA on a limited basis no rate change
Iowa Medical Malpractice - Summary of Filings Reviewed Filing Number Indicated Rate Change
Exhibit 2
Company Name
Effective Date
Practice Area
Proposed Rate Change
MMIC
3/15/1995
Healthcare System Liability Protection (aka Hospital liability)
7.1% lower rates than St. Paul's no rate change- new program 1994 rates
Actuarial Support filing for a new hospital liability program; Ernst & Young provided a rate analysis based on a combination of St. Paul rates and HIF rates; analysis appears to be reasonable after reviewing on a high level; no DOI actuarial documentation
Current Base Rate
MMIC (Midwest Medical Inurance Company)
1/1/2000 99-01 2199 Physician & Surgeons Rate Filing
8.0%
Bickerstaff & Whatley conducted an independent rate review; reason fo increase was due to the increase in severity; the entire actuarial report wasn't provided with the filing, just the summary level exhibits from the actuarial report. As a result, there is no actuarial support for the increased severity. The DOI didn't request 11.80% futher exhibits.
Mutual Insurance Corporation of America National Union Fire Insurance Co of Pittsburgh National Union Fire Insurance Co of Pittsburgh National Union Fire Insurance Co of Pittsburgh PICWisconsin
3/22/2001 4/21/2000 8/4/2000 8/6/2004 3/1/2005
Hospital Liability Physicians and Surgeons Physicians and Surgeons Podiatric Professional Liability Physicians and Surgeons
25.0% 19.7% 19.7% 40.0% 5.0% Updated Rules and Rate Manual that has been revised to be consistane with previously filed updates. 0.0% 0.5% 30.3% Introduction of Minimum Premium
No Documentation Given 19.69% Some selection and Impact Exhibits 19.69% Some selection and Impact Exhibits 45.20% Triangles and Selections Yes, some summary level data but 10.20% not too detailed
PICWisconsin PICWisconsin PICWisconsin PICWisconsin PICWisconsin
11/1/2004 3/30/2004 4/1/2004 1/1/2004 11/18/2003
Hospital Professional Liability Hospital Professional Liability Physicians and Surgeons Professional Liability Hospital Professional Liability
Increased ILF's based on competitor data Increased ILF's based on competitor 0.48% data Yes, some summary level data but 36.50% not too detailed Goes through assumptions
PICWisconsin PICWisconsin
10/1/2003 1/1/2003
Hospital Professional Liability Physicians and Surgeons
13.6% 83.5% & 25.8% 24.0%
Some high level calc's
PICWisconsin PICWisconsin PICWisconsin PICWisconsin PICWisconsin PICWisconsin PICWisconsin
10/1/2002 9/1/2002 5/14/2002 1/1/2002 1/1/2002 9/30/1999 7/1/1999
Hospital Professional Liability Physicians and Surgeons Hospital Professional Liability Hospital Professional Liability Physicians and Surgeons Hospital Professional Liability Physicians and Surgeons
30.0% 2.7% Adding Deductible Credits to HGL 12.5% 5.1% Initial Rate and Rule Filing Initial Rate and Rule Filing
73.00% Some Triangle work and Selections No, selection was made to position them in between MMIC and St. Paul rate increases Increased ILF's based on competitor data No In response to St. Pauls rate level changes In response to St. Pauls rate level changes Rates selected from Competitors Rates selected from Competitors
Podiatry Insurance Co of America
2/24/2003 PICA-IA-P-RProfessional Liability - Podiatry
19.5%
Some triangle & trend exhibits by 41.10% TTP Looks to be a pretty comprehensive set of exhibits prepared by their Chief 35.00% Actuary Looks to be a pretty comprehensive set of exhibits prepared by their Chief 14.00% Actuary 35.00% Some Triangle and Trending Data 14.00% Some Triangles and Selections
Podiatry Insurance Co of America
1/1/2004 PICA-IA-P-RProfessional Liability - Podiatry
18.5%
Podiatry Insurance Co of America Podiatry Insurance Co of America Podiatry Insurance Co of America Podiatry Insurance Co of America Podiatry Insurance Co of America
1/1/2005 3/1/2005 1/1/2004 1/1/2005 1/1/2005
PICA-IA-P-RProfessional Liability - Podiatry SERFF Podiatrist Professional Liability SERFF Podiatrist Professional Liability SERFF Podiatrist Professional Liability SERFF Podiatrist Professional Liability
9.0% 0.0% 18.5% 0.0% 9.0%
Iowa Medical Malpractice - Summary of Filings Reviewed Filing Number Indicated Rate Change
Exhibit 2
Company Name
Effective Date
Practice Area
Proposed Rate Change
Preferred Profesional Insurance Company
1/1/2000 IA-99-2
Physician & Surgeons Rate Filing
N/A
N/A
Preferred Profesional Insurance Company
1/1/2002 IA-01-01
Physician & Surgeons Rate Filing
15% (selected loss ratio of 105.9%)
29.4% (indicated loss ratio of 119.2%
Actuarial Support Current Base Rate Filing only provides for a change in the Risk Management premium discount as a separate discount available to health care providers Not obvious no change in class relativity factors; no change in ILF's; actuarial support is justified and provided- increase is driven by the loss development; selected loss ratio underlying the 15% rate increase appears reasonable 2271 (class 1 100K/300K limits)
Preferred Profesional Insurance Company
1/1/2003 IA-02-01
Physician & Surgeons Rate Filing
10.0%
no change in class relativity factors; no change in ILF's; selected loss ratio underlying the 10% rate increase appears reasonable; changed loss trend from 5% to 6%; lower LDF's selected compared to '01 filing; they lowered the pre-tax profit from 8% in '01 to 5% in '02; less loss discount resulting in a lower 2873 (class 1 100K/300K limits) 12.20% expected loss ratio historical on-level factors keep changing; lower ldf's; it appears that the rate increase is driven by higher than expected loss development at 12 & 24 months of age; since they put the losses on level to their net retention 400K & 500K, the loss ratio wouldn't be impacted by a few large claims - could the rate increase unnecessarily be driven by increasing case reserve adequacy levels or higher frequency trends that should have been reviewed but aren't based on the information provided in the filing? will need to look at company financials to get an idea on 3735 (class 1 100K/300K limits) 106.20% case rx's & freq; the ultimate on-level loss ratios for coverage years 99-02 are much lower in the '05 rate filing vs. the '04 rate filing; it appears that this diff. is driven by the effect of the prior rate increase but, even more significantly, the '05 study doesn't adjust losses and premium to current net retentions, as was done in the pastshould it have been asked for an explanation in the change in the methodologies? perhaps there was a decrease in the reinsurance pricing that results in better rates to the 4295 (class 1 100K/300K limits) 20.60% insureds
Preferred Profesional Insurance Company
1/1/2004 IA-03-02
Physician & Surgeons Rate Filing
30.0%
Preferred Profesional Insurance Company
1/1/2005 IA-04-02
Physician & Surgeons Rate Filing
15.0%
Preferred Professional Insurance Co Professional Solutions Insurance Company Professional Solutions Insurance Company
10/26/2005 4/24/2004 SERFF 11/1/2003 SERFF
Physician & Surgeon Claims Made Physicians and Surgeons Physicians and Surgeons
10.0% New Program
26.50% Yes, some Triangle and LR work Ammended Rate Page
Pronational Insurance Company
1/1/2000
Physician Professional Liability
Pronational Insurance Company
1/1/2000
Physician Professional Liability - Tail Coverage
Iowa Medical Malpractice - Summary of Filings Reviewed Filing Number Indicated Rate Change
Exhibit 2
Company Name
Effective Date
Practice Area
Proposed Rate Change
Actuarial Support
Current Base Rate
Pronational Insurance Company
2/22/2000
Physician Professional Liability MMIC and Medical Protective were used to analyze base rates, due to PN's low exposure
Pronational Insurance Company
4/27/2004
Health Care Professionals Liability
58.8% 58.8%?
Pronational Insurance Company
3/1/2003
Physicians and Surgeons Liability
0.0% Class Assignments were revised based on historical results by specialty companywide
Pronational Insurance Company(cont) No relevant filings; All MedMal Filings relate to pre 2003 "Health Care Facilities" which were non-profit and members of the American Association of Homes and Services for the Aging 1/17/2002 01-10-047 Hospital Professional Liability / Medical Liability Additional Reporting Endorsements
Property & Casualty Ins Co of Hartford St. Paul
Appendix A – CAS: Statement of Principals Regarding Ratemaking
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Appendix 1 Statement of Principles Regarding Property and Casualty Insurance Ratemaking (Adopted by the Board of Directors of the CAS May 1988) The purpose of this Statement is to identify and describe principles applicable to the determination and review of property and casualty insurance rates. The principles in this Statement are limited to that portion of the ratemaking process involving the estimation of costs associated with the transfer of risk. This Statement consists of four parts: I. II. III. IV. DEFINITIONS PRINCIPLES CONSIDERATIONS CONCLUSION
The principles contained in this Statement provide the foundation for the development of actuarial procedures and standards of practice. It is important that proper actuarial procedures be employed to derive rates that protect the insurance system’s financial soundness and promote equity and availability for insurance consumers. Although this Statement addresses property and casualty insurance ratemaking, the principles contained in this Statement apply to other risk transfer mechanisms. I. DEFINITIONS Ratemaking is the process of establishing rates used in insurance or other risk transfer mechanisms. This process involves a number of considerations including marketing goals, competition and legal restrictions to the extent they affect the estimation of future costs associated with the transfer of risk. This Statement is limited to principles applicable to the estimation of these costs. Such costs include claims, claim settlement expenses, operational and administrative expenses, and the cost of capital. Summary descriptions of these costs are as follows: —Incurred losses are the cost of claims insured. —Allocated loss adjustment expenses are claims settlement costs directly assignable to specific claims. —Unallocated loss adjustment expenses are all costs associated with the claim settlement function not directly assignable to specific claims.
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—Commission and brokerage expenses are compensation to agents and brokers. —Other acquisition expenses are all costs, except commission and brokerage, associated with the acquisition of business. —Taxes, licenses and fees are all taxes and miscellaneous fees except federal income taxes. —Policyholder dividends are a non-guaranteed return of premium charged to operations as an expense. —General administrative expenses are all other operational and administrative costs. —The underwriting profit and contingency provisions are the amounts that, when considered with net investment and other income, provide an appropriate total after-tax return. II. PRINCIPLES Ratemaking is prospective because the property and casualty insurance rate must be developed prior to the transfer of risk. Principle 1: A rate is an estimate of the expected value of future costs. Ratemaking should provide for all costs so that the insurance system is financially sound. Principle 2: A rate provides for all costs associated with the transfer of risk. Ratemaking should provide for the costs of an individual risk transfer so that equity among insureds is maintained. When the experience of an individual risk does not provide a credible basis for estimating these costs, it is appropriate to consider the aggregate experience of similar risks. A rate estimated from such experience is an estimate of the costs of the risk transfer for each individual in the class. Principle 3: A rate provides for the costs associated with an individual risk transfer. Ratemaking produces cost estimates that are actuarially sound if the estimation is based on Principles 1, 2, and 3. Such rates comply with four criteria commonly used by actuaries: reasonable, not excessive, not inadequate, and not unfairly discriminatory. Principle 4: A rate is reasonable and not excessive, inadequate, or unfairly discriminatory if it is an actuarially sound estimate of the expected value of all future costs associated with an individual risk transfer.
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III. CONSIDERATIONS A number of ratemaking methodologies have been established by precedent or common usage within the actuarial profession. Since it is desirable to encourage experimentation and innovation in ratemaking, the actuary need not be completely bound by these precedents. Regardless of the ratemaking methodology utilized, the material assumptions should be documented and available for disclosure. While no ratemaking methodology is appropriate in all cases, a number of considerations commonly apply. Some of these considerations are listed below with summary descriptions. These considerations are intended to provide a foundation for the development of actuarial procedures and standards of practice. Exposure Unit—The determination of an appropriate exposure unit or premium basis is essential. It is desirable that the exposure unit vary with the hazard and be practical and verifiable. Data—Historical premium, exposure, loss and expense experience is usually the starting point of ratemaking. This experience is relevant if it provides a basis for developing a reasonable indication of the future. Other relevant data may supplement historical experience. These other data may be external to the company or to the insurance industry and may indicate the general direction of trends in insurance claim costs, claim frequencies, expenses and premiums. Organization of Data—There are several acceptable methods of organizing data including calendar year, accident year, report year and policy year. Each presents certain advantages and disadvantages; but, if handled properly, each may be used to produce rates. Data availability, clarity, simplicity, and the nature of the insurance coverage affect the choice. Homogeneity—Ratemaking accuracy often is improved by subdividing experience into groups exhibiting similar characteristics. For a heterogeneous product, consideration should be given to segregating the experience into more homogeneous groupings. Additionally, subdividing or combining the data so as to minimize the distorting effects of operational or procedural changes should be fully explored. Credibility—Credibility is a measure of the predictive value that the actuary attaches to a particular body of data. Credibility is increased by making groupings more homogeneous or by increasing the size of the group analyzed. A group should be large enough to be statistically reliable. Obtaining homogeneous groupings requires refinement and partitioning of the data. There is a point at which partitioning divides data into groups too small to provide credible patterns. Each situation requires balancing homogeneity and the volume of data. Loss Development—When incurred losses and loss adjustment expenses are estimated, the development of each should be considered. The determination of the expected loss development is subject to the principles set forth in the Casualty Actuarial Society’s Statement of Principles Regarding Property and Casualty Loss and Loss Adjustment Expense Reserves.
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Trends—Consideration should be given to past and prospective changes in claim costs, claim frequencies, exposures, expenses and premiums. Catastrophes—Consideration should be given to the impact of catastrophes on the experience and procedures should be developed to include an allowance for the catastrophe exposure in the rate. Policy Provisions—Consideration should be given to the effect of salvage and subrogation, coinsurance, coverage limits, deductibles, coordination of benefits, second injury fund recoveries and other policy provisions. Mix of Business—Consideration should be given to distributional changes in deductibles, coverage limitations or type of risks that may affect the frequency or severity of claims. Reinsurance—Consideration should be given to the effect of reinsurance arrangements. Operational Changes—Consideration should be given to operational changes such as changes in the underwriting process, claim handling, case reserving and marketing practices that affect the continuity of the experience. Other Influences—The impact of external influences on the expected future experience should be considered. Considerations include the judicial environment, regulatory and legislative changes, guaranty funds, economic variable, and residual market mechanisms including subsidies of residual market rate deficiencies. Classification Plans—A properly defined classification plan enables the development of actuarially sound rates. Individual Risk Rating—When an individual risk’s experience is sufficiently credible, the premium for that risk should be modified to reflect the individual experience. Consideration should be given to the impact of individual risk rating plans on the overall experience. Risk—The rate should include a charge for the risk of random variation from the expected costs. This risk charge should be reflected in the determination of the appropriate total return consistent with the cost of capital and, therefore, influences the underwriting profit provision. The rate should also include a charge for any systematic variation of the estimated costs from the expected costs. This charge should be reflected in the determination of the contingency provision. Investment and Other Income—The contribution of net investment and other income should be considered. Actuarial Judgment—Informed actuarial judgments can be used effectively in ratemaking. Such judgments may be applied throughout the ratemaking process and should be documented and available for disclosure. 8
IV. CONCLUSION The actuary, by applying the ratemaking principles in this Statement, will derive an estimation of the future costs associated with the transfer of risk. Other business considerations are also a part of ratemaking. By interacting with professionals from various fields including underwriting, marketing, law, claims, and finance, the actuary has a key role in the ratemaking process.
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