Good for Business

The passage of medical liability reforms in Texas had physicians poised to reap long-awaited financial relief. In January 2004, TMLT cut premiums 12 percent. Other carriers subsequently followed suit, and more medical liability insurance companies entered Texas, eager to sell policies to physicians.

"The results of tort reform have been absolutely amazing," said David Teuscher, MD, chair of TMA's Committee on Professional Liability. "I don't think anyone in their right mind would have testified four-and-a-half years ago that if we pass this, you'd see physicians' insurance rates drop in half and the number of carriers multiply eightfold."

In 2003, four medical liability insurance carriers were doing business in a state that now boasts more than 30. TMLT was one of the four insurance carriers that not only endured the tort reform battle, but was instrumental in supporting Proposition 12. In 2002, TMLT helped create TAPA; its 200 members fought to pass the crucial legislation. TMLT has worked ever since to achieve meaningful tort reform and to preserve it through ensuing legislative sessions.

"Some of our competitors today who are enjoying the new, more reasonable legal environment weren't even around in 2003 when the battle for tort reform was won by TMA and the members of TAPA," said Bob Fields, TMLT's chief executive officer.

With a current policyholder count of 14,224, TMLT insures more physicians in Texas than any other carrier and has reduced rates four times: 12 percent in 2004, 5 percent in 2005 and 2006, and 7.5 percent this year. Policyholders will also receive a 20-percent dividend this year.

Since 2003, TMLT has reported a premium savings of nearly $139 million and has returned dividends of 25 percent, amounting to nearly $45 million. These dividends were declared in 2005 and 2006 for return to policyholders in 2006 and 2007. And claims intake has dropped. (See "TMLT Claims Intake, 2000-06.")

TMLT isn't the only company decreasing premiums. Last year, Advocate MD reduced premiums 19.9 percent, The Doctors Company cut premiums 18 percent, and Medical Protective lowered them 13 percent. American Physicians Insurance Company lowered premiums twice – by 5 percent and 13 percent – in 2005. The same year, the Joint Underwriting Association cut premiums 10 percent.

Getting in on the action in Texas' medical liability insurance sector was Austin-based Medicus Insurance Company, which began writing policies in September 2006. Charles Bailey, MD, was TMA president in 2003 and is now vice president of medical relations for Medicus.

"Increased competition is without a doubt exactly what we were all hoping for when we got tort reform passed," Dr. Bailey said. "The result of Medicus coming into the state has been that, as we've quoted rates to different physicians with existing carriers, the carriers almost uniformly have lowered their rates to become competitive with us."