Commissioner Holly C. Bakke
|For Immediate Release: August 2, 2002||
For Further Information:: Mary Caffrey - (609)292-5064
Medical Malpractice Carrier to Write New Policies by September 1
TRENTON, N.J. - Banking and Insurance Commissioner Holly C. Bakke today issued her conditional approval of MIIX Advantage, a new medical malpractice insurer that will begin writing policies by September 1.
"The Department's conditional approval of MIIX Advantage improves the availability of medical malpractice coverage in New Jersey," Commissioner Bakke said. " This action is good news to physicians who are interested in this new company but needed some certainty that it would be approved."
A prior company, the MIIX Group, was placed in solvent runoff on May 3.
Today's action allows MIIX Advantage to formally organize as an insurance company. When that process is complete later this month, MIIX Advantage will be able to offer coverage to doctors whose MIIX Group policies expire on or after September 1. Only doctors who made contributions to the MIIX Advantage capital campaign are eligible. The Department had previously authorized the MIIX Group to offer renewals through August 31. The MIIX Group, until recently New Jersey's largest medical malpractice carrier, is now the second-largest insurer with 36 percent of the market.
Final approval will come after MIIX Advantage completes its certificate of incorporation, and the Department completes reviews of those documents. Also, the Department will conduct an exam to ensure that all of the funds to capitalize the new company were deposited.
Commissioner Bakke noted that DOBI paid close attention to MIIX Advantage's corporate governance structure. Initially, the Department will allow eight current MIIX Group directors to serve on the 14-member MIIX Advantage board. Over a period of four years, some members serving on both boards will leave MIIX Advantage, and the number of current MIIX Group directors on the MIIX Advantage board will drop to five.
"The timetable we have established with MIIX Advantage officials will permit a successful startup, allowing the new company to tap the expertise of existing board members. As the new company matures, however, we feel it is important for MIIX Advantage to distinguish itself from the MIIX Group. While staff and infrastructure may be shared, our plan will give MIIX Advantage investors the comfort of knowing that directors are acting in their interests, and in their interests alone."
Today's action follows Commissioner Bakke's May decision to place the MIIX Group into solvent runoff after learning that the company's surplus had dropped $128 million between September and December 2001.
In a solvent runoff, the Department determines that a carrier has enough funds to pay off claims from existing policies but should not continue taking on new customers. In the case of MIIX, the Department found the carrier had enough funds to renew its New Jersey policies for a limited period while it raised funds to form the new company. The plan offered assurance for current MIIX policyholders that their coverage is safe, while providing an opportunity for the replacement company to organize.
"Today's conditional approval minimizes the disruption in the medical malpractice market, as MIIX Advantage can renew physicians previously insured by the MIIX Group. The new company can consider new business as well," Commissioner Bakke said.
MIIX Advantage will be capitalized with $30 million in physician contributions. An estimated $1.2 billion in assets from the existing MIIX Group will not be used for the new venture, as those funds will be used to pay off claims from policies written by the existing company.
Starting September 1, all policies will be written through MIIX Advantage for doctors who have made a capital contribution to the new company. Physicians whose policies come up for renewal prior to that date will be renewed through the MIIX Group, under the terms of the May 3 decision limiting renewals to New Jersey physicians already with the company.
The Department will continue to offer its placement program for physicians who have trouble finding coverage. Under the program, featured on the DOBI Web site, doctors who show that they have been declined coverage by two companies can submit their claims history to the Department, which will assist them in obtaining a quote.
Commissioner Bakke has also taken steps to give physicians more choices in the medical malpractice market. Under an order to show cause, the Department is asking carriers to offer deductibles and installment plans. The Department is also promoting broader availability of "claims made" coverage, which could offer significant savings to younger doctors. (A claims made policy offers protection for the year of coverage only.)
In addition, Commissioner Bakke has met with groups of doctors both in Trenton and at hospitals around the state to gather input and develop solutions that address the problem of affordable insurance for those in high-risk specialties.
"It is my belief that by approaching this not simply as an insurance problem but as a health care delivery problem, this Administration will come up with long-term answers to the rising costs of coverage," Commissioner Bakke said.