Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: Jim Spitz who wrote (27592)	6/14/2001 8:27:12 AM
From: Jim Spitz	Respond to of 37746

Georgia suspends St. Paul Cos. over decision to quit malpractice business there Dee DePass Star Tribune Thursday, June 14, 2001 Georgia's insurance commissioner slapped The St. Paul Companies with a three-year license-suspension Thursday. The action was in response to the company's decision not to renew 1,262 medical-malpractice policies in that state. John Oxendine, the commissioner, also placed the St. Paul-based insurer on probation for one year. The suspension prevents the company from writing new policies in Georgia and orders it to continue insuring all 1,262 physicians and surgeons who currently have St. Paul medical-liability insurance. The suspension goes into effect in September. The St. Paul has nearly $200 million in Georgia insurance premiums. The policies in dispute represent about $23 million in premiums and about $41 million in losses and expense. The St. Paul officials called the suspension an "outrage." The company said the action is "grossly unfair to Georgia's physicians, businesses and insurance agents. The St. Paul has acted fully within all laws and regulations of the state of Georgia." In May, The St. Paul evaluated the $41 million in physician medical-liability losses it had incurred in the state and decided to shed the bulk of those policies. It began sending nonrenewal notices to the 1,262 Georgia physicians and surgeons who had individual policies with the company, said Patrick Hirigoyen, a company spokesman. Doctors insured under St. Paul hospital policies in Georgia represent another $16 million in premiums; their policies were unaffected. Hirigoyen said the company cannot continue to take in the $23 million in annual premiums while paying out almost twice that in expenses and losses. The company said it will take the commissioner's decision in court. If the commissioner's decision is upheld, The St. Paul stands to lose out on millions of dollars in new policies in Georgia while continuing to lose millions from its medical-liability business there. Asked whether St. Paul officials feared similar moves by insurance commissioners in other states, Hirigoyen said, "I have not heard of anyone being fearful of that because it's such an unusual and odd type of action. I think this is the rather unusual step by one insurance commissioner." The company requested and received rate increases in 20 out of 28 states where it had profitability issues. Hirigoyen said it was not feasible to request rate increases from Georgia regulators because of the state's lengthy process. In 1999, The St. Paul began enacting premium increases across all lines of business in an attempt to recover from years of price competition that dragged the entire industry into unprofitability. CEO Doug Leatherdale also announced that the company would not renew troublesome policies. The strategy has largely worked, prompting a turnaround in profits that has reduced the chances of The St. Paul becoming a takeover candidate. In a statement, Oxendine said, "Medical malpractice coverage is essential to doctors who practice medicine in today's litigious society. ... This coverage is a necessity for doctors, and therefore also for the patients they serve. I expect St. Paul to continue the coverage they contracted to provide to their physician policyholders, and I hope this action sends notice to other insurers that harsh penalties await those companies who attempt to mistreat their customers." St. Paul officials said they had offered to continue coverage for Georgia doctors under a different policy that combined property and liability coverages at higher premiums. -- Dee DePass is at ddepass@startribune.com . © Copyright 2001 Star Tribune. All rights reserved. NOTE: Can you say "Good Ol' Boys"?