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Insurance Commissioner Announces No Change in Primary Medical Liability Coverage Limits

September 18, 2017

Last week, Jessica K. Altman, Pennsylvania’s acting insurance commissioner, announced that she was unable to determine that there is sufficient additional basic insurance capacity to increase the current basic primary limits for calendar years 2018 and 2019.

Under Pennsylvania's Act 13 of 2002, the Medical Care Availability and Reduction of Error Act (MCARE), basic primary professional liability insurance limits could potentially be increased in 2018 from $500,000 to $750,000 per claim, with a corresponding decrease in MCARE limits from $500,000 to $250,000 per claim. The change in coverage limits, which was designed to eventually phase-out the MCARE Fund, is subject to the insurance commissioner’s evaluation and analysis of the basic medical malpractice insurance coverage market capacity. A determination that additional capacity is not available would result in primary and MCARE Fund coverage limits for 2017 remaining in effect until such capacity is available in the future.

The department has previously undertaken reviews of the basic insurance coverage market capacity six times. To date, none of the prior reviews resulted in a change in the fund coverage levels.

In 2017, the department engaged Deloitte Consulting LLP to perform a Medical Professional Liability Basic Insurance Capacity Study as of December 31, 2016. The study reviewed information from a data call by the department and other sources. The study evaluated market share, leverage ratios, and financial strength of medical professional liability insurers in Pennsylvania. The study concluded that the increased use of non-traditional insurers, coupled with information showing net premium to surplus ratios for risk retention groups increasing, and an increase in loss ratios across all carrier types, may be considered indicative of a marketplace that may not have the financial capacity to withstand an increase in the basic insurance limit. Accordingly, there will be no increase to the current basic primary limits for calendar years 2018 and 2019.

Under current law, the insurance commissioner will re-evaluate market capacity to support increased basic primary professional liability insurance capacity again in 2019 for potential coverage limit changes beginning in 2020.

For more information, contact Martin Ciccocioppo, HAP’s vice president, research.

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