New Jersey regulators have ordered medical malpractice insurer Zurich American, New York, to roll back "excessive" premiums, which soared 108% in 2003, to no more than 30% above the previous base rate. The order is expected to save 74 New Jersey physicians insured by Zurich about $2.7 million in premiums, a spokeswoman for the Department of Banking and Insurance said. Doctors who already have paid will receive refunds. In 2002 Zurich raised rates for about half of its providers by more than 30%, far steeper increases than at other malpractice carriers, which on average raised rates by about 30% for only 7.4% of their providers, officials said. Under Zurich's proposed rate increase, the carrier would have garnered $3.8 million; as a result of the rollback, it will collect about $1 million, officials said.
In other malpractice news, Tennessee Insurance Commissioner Paula Flowers expressed doubt about the state's ability to financially rehabilitate two medical malpractice insurers placed in receivership last week. The firms, reciprocal insurers organized by members who pool resources for their own coverage, are not required to participate in a state program that covers overdue claims of insolvent insurers. The receivership action was taken when authorities in Virginia froze payments from Reciprocal of America, Richmond, Va., a primary re-insurer for the firms in Tennessee -- Doctors' Insurance Reciprocal, which covers eight physicians, and the Reciprocal Alliance, which covers about 37 hospitals in the state. ROA and the two local malpractice insurers shared common management. -- by Cinda Becker and Michael Romano