St. Paul bowing out of liability market

Announcement comes as the AMA vows to step up its efforts to combat soaring insurance rates and shrinking insurance options for physicians.

By Tanya Albert, AMNews staff. Jan. 7, 2002.

More than 40,000 physicians will scramble to find a new insurance carrier to pick up their medical liability insurance coverage over the next 18 to 24 months.

The nation's second-largest physician insurer -- The St. Paul Companies -- in December announced that it no longer would write policies for doctors because its medical liability division is losing millions of dollars. Company executives said they would phase out that division of the company by not renewing policies as they expire.

St. Paul's announcement comes in an already tight medical malpractice market that has seen insurers raise rates and become more selective in whom they will cover.

"Other major companies have begun reducing their underwriting, and I wouldn't be surprised to see more," said Lawrence E. Smarr, president of the Physician Insurers Assn. of America. "We are going to see many doctors who can't find insurance."

Overland Park, Kan., family physician Deborah McPherson, MD, who renewed her policy in early December 2001, plans to start shopping for another carrier soon. But she fears that some physicians may take another route in the volatile market.

"The alternative is to not practice," said Dr. McPherson, who practices part time and is the assistant director of medical education for the American Academy of Family Physicians. "For a lot of physicians, that may be a real option."

The other big concern for physicians currently insured through St. Paul -- tail coverage.

Doctors will have the option of buying tail coverage from St. Paul so they are insured against lawsuits that patients who they treated while insured with St. Paul file after the company is no longer their carrier, a spokesman from the insurer said. Doctors also will have the option of purchasing tail coverage from other companies. [...]