GENERAL ASSEMBLY OF NORTH CAROLINA

SESSION 2007

H                                                                                                                                                    1

HOUSE BILL 747

Short Title:     Ins. Commr./Approval of Med Mal Rates.		(Public)
Sponsors:	Representative Faison.
Referred to:	Insurance.

March 15, 2007

A BILL TO BE ENTITLED

AN ACT TO AUTHORIZE THE COMMISSIONER OF INSURANCE TO consider certain circumstances when reviewing proposed rates submitted by medical malpractice INSURERS for malpractice insurance coverage.

The General Assembly of North Carolina enacts:

SECTION 1.  G.S. 58‑40‑25 reads as rewritten:

"§ 58‑40‑25.  Rating methods.

In determining whether rates comply with the standards under G.S. 58‑40‑20, the following criteria shall be applied:

(1)       Due consideration shall be given to past and prospective loss and expense experience within this State, to catastrophe hazards, to a reasonable margin for underwriting profit and contingencies, to trends within this State, to dividends or savings to be allowed or returned by insurers to their policyholders, members, or subscribers, and to all other relevant factors, including judgment factors; however, regional or countrywide expense or loss experience and other regional or countrywide data may be considered only when credible North Carolina expense or loss experience or other data is not available.

(2)       Risks Except as authorized under subdivision (2a) of this section, risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. Those standards may measure any differences among risks that have probable effect upon losses or expenses. Classifications or modifications of classifications of risks may be established based upon size, expense, management, individual experience, location or dispersion of hazard, or any other reasonable considerations. Those classifications and modifications shall apply to all risks under the same or substantially the same circumstances or conditions.

(2a) The impact of medical malpractice insurance rates on the cost and availability of malpractice insurance for certain classes of health care providers. In reviewing rates proposed by a medical malpractice insurer, the Commissioner may require that the risks related to all medical malpractice claims shall be spread among all classes of health care providers regardless of the claims experience for a given class of health care provider.

(3)       The expense provisions included in the rates to be used by an insurer may reflect the operating methods of the insurer and, as far as it is credible, its own expense experience.

(4)       In the case of property insurance rates under this Article, consideration shall be given to the insurance public protection classifications of fire districts established by the Commissioner. The Commissioner shall establish and modify from time to time insurance public protection districts for all rural areas of the State and for cities with populations of 100,000 or fewer, according to the most recent annual population estimates certified by the State Budget Officer. In establishing and modifying these districts, the Commissioner shall use standards at least equivalent to those used by the Insurance Services Office, Inc., or any successor organization. The standards developed by the Commissioner are subject to Article 2A of Chapter 150B of the General Statutes. The insurance public protection classifications established by the Commissioner issued pursuant to the provisions of this Article shall be subject to appeal as provided in G.S. 58‑2‑75, et seq. The exceptions stated in G.S. 58‑2‑75(a) do not apply."

SECTION 2.  This act is effective when it becomes law and applies to rates filed for approval by the Commissioner of Insurance on and after that date.