California Medical Malpractice Insurance

The History of Medical Malpractice Insurance in California

In the early 1970's, the state of California faced a medical malpractice insurance crisis. Frequency, severity and large jury awards caused liability premiums to escalate as much as 300%. For high-risk specialties in particular, such as OB/GYN's, Neurosurgeons, Vascular Surgeons, and General Surgeons, this became a very difficult time to practice medicine.

Finding affordable medical liability coverage was difficult and some doctors were forced to shut their doors. The governor of California was forced to call a special session to address what was labeled a medical “malpractice crisis.” The result of this session was the enactment of the Medical Injury Compensation Reform Act of 1975 or “MICRA.”

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Statistics for California Health Care Providers & Physician Insurance

• Licensed Physicians — 99,900
• Total Written Premiums in California — $548,000,000
• Total Amount of Incurred Losses — $133,000,000
• Loss Ratio — 24.24%
• Liability Insurance Companies Writing Policies — 40

New Lower California Malpractice Insurance Rates

On July 15, 2011 seven of the carriers that make up the majority of the California medical malpractice insurance market filed for rate decreases ranging from 1.35% to 19%, including the state's largest carrier at 7.31%. Combined with two new carriers entering in to the market this year, California has continued to make a very competitive market for medical malpractice insurance.

MICRA Summary

• Attorney contingency fees are limited to a sliding scale
• Non-economic damages are capped at $250,000
• Compensation for economic damages (i.e. medical costs, lost wages, future earnings, etc. are ensured)
• Statute of Limitations on claims
• Advanced notice of claim required
• Binding arbitration for disputes allowed
• Provisions for periodic payments on future damages

The impact on the California medical malpractice environment has been greatly impacted by the implementation of MICRA. Access to healthcare has increased, specialists are more readily available, injured patients receive awards quicker, and California now has one of the most stable rates in the country for medical malpractice insurance.

Summary of the California Medical Malpractice Insurance Market

Since MICRA, the California medical malpractice insurance market has become and remains very competitive. The premium rates in California have been very stable as have the malpractice claim trends. This stability has attracted numerous medical liability insurance carriers to the state of California and gives physicians multiple choices to choose from. These choices of liability insurance carrier types include — Admitted Carriers, Surplus Lines Carriers and Risk Retention Groups (RRG).

The market in California has been labeled as a “soft market” — meaning there have been fewer malpractice claims over the past several years. This allows several of the medical malpractice insurance companies to issue dividends or reimbursements back to the insured doctors.

External Links & Resources for California Physicians & Surgeons

• California Medical Association (CMA)
• Californians Allied for Patient Protection (CAPP)
• California Medical Group Management Association
• California Society of Addiction Medicine (CSAM)
• California Association of Ayurvedic Medicine (CAAM)
• San Bernardino County Medical Society (SBCMS)
• San Francisco Medical Society (SFMS)
• Los Angeles County Medical Association (LACMA)
• Orange County Medical Association (OCMA)
• California Ambulatory Surgery Association (CASA)