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West Zone: California Orders MedMal Cuts

Insurance Chronicle

The California insurance commissioner has ordered the state's second largest medical malpractice insurer, SCPIE Indemnity, to slash its proposed rate increase for doctors by 36% percent after an eight-month regulatory investigation of the firm's rate request.

The ruling was in response to the first- ever consumer group challenge to a medical malpractice insurance rate hike request, brought by the Foundation for Taxpayer and Consumer Rights (FTCR), a California nonprofit organization.

Instead of the company's proposal for a 15.6% increase that would have gone into effect on January 1, 2003, the commissioner John Garamendi will only allow SCPIE and its affiliate, American Healthcare Indemnity, to increase premiums by 9.9% beginning Oct. 1.

The net impact is a $16 million savings for the insurers 9,000 physicians in 2003 and an additional $7.2 million of savings in next year's premiums.