Pickens Urges Companies to Consider Tort Reform Act When Setting Rates

Arkansas Insurance Commissioner Mike Pickens announced the release and distribution of a Bulletin, which urges insurance companies to consider The Civil Justice Reform Act, Act 649 of 2003, when submitting rate filings with the Arkansas Insurance Department.

Bulletin 2-2003 outlines the department’s expectations with regard to the new Act, which became effective March 25 when signed by Governor Mike Huckabee.

“This Department remains concerned about the availability and affordability of professional liability insurance, especially in the medical malpractice and nursing home liability markets,” Commissioner Pickens said. “We expect reporting analyses that reflect the impact of Act 649 when companies file certain rate information with this Department.”

The Bulletin addresses all professional liability lines of insurance and requires insurance companies to do the following when making rate filings with the Arkansas Insurance Department:
· Provide an analysis regarding the impact of the Act, based on actuarial principles and standards of practice
· Implement any reduction to its rates consistent with that analysis, and
· Explain the Act’s impact on underwriting, such as whether any existing restrictions will be liberalized.

“Insurance companies have told us that the judicial climate is a factor when considering entering and remaining in a market,” Commissioner Pickens stated. “We hope the passage of Act 649 and the Department’s commitment to ensure the Act is considered a relevant factor when setting rates will attract more insurance companies, increase competition, and stabilize rates for Arkansans.”