Nevada Commissioner Approves Increase in Med-Mal Rates

Continental Casualty Company; America Casualty Company of Reading, Penn; and Transportation Insurance Company (collectively CNA) received approval from Nevada Insurance Commissioner Alice A. Molasky-Arman to increase its medical malpractice rates 52 percent, rather than the proposed 100 percent requested.

Molasky-Arman approved the rates after negotiations between the company and her staff. The original application submitted by CNA proposed statistical support for an increase of 100 percent. Division of Insurance actuaries challenged the credibility of the support, and countered with a recommendation for a reduced increase. Molasky-Arman’s staff’s recommendation was supported based on trending rates for seven years up to 2001, using a 6 percent annual trend, and assuming 1994 rates were appropriate. The new rates are expected to become effective sometime after Aug. 2, 2001, which is still to be determined by the company.

The Commissioner is charged with ensuring that rates that are not excessive, inadequate, or unfairly discriminatory. Typically, the commissioner would tend not to approve an increase for an insured greater than 20 percent annually; however, due to the serious deficiency in CNA’s current rates, she approved the rates in conformance with Nevada law. Further, Molasky-Arman urged CNA to file on a regular basis to avoid serious rate disruptions to consumers in the future.

CNA, one of the larger writers of medical malpractice liability insurance, insuring 300 doctors, has not changed its rates since the inception of its medical malpractice liability program in Nevada in 1994.

CNA is also consolidating its business and will only continue business in Continental Casualty Company. Medical malpractice rates have been spiraling nationwide.

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