News Release

New Jersey Department of
Banking and Insurance
Commissioner Holly C. Bakke

For Immediate Release:  September 10, 2003

For Further Information::  Mary Cozzolino - (609) 292-5064


TRENTON- To assure continued access to health care, Banking and Insurance Commissioner Holly C. Bakke issued an order to reactivate the Medical Malpractice Reinsurance Association for the sole purpose of making reinsurance available to the state's medical malpractice liability carriers.

The Commissioner's decision to reactivate the Association seeks to maintain stability and availability in the medical malpractice marketplace and preserve patient access to physician services. "Reactivation is a necessary step in the Department's ongoing efforts to assure the availability of coverage for New Jersey doctors, so they can continue to do what they do best--- serve patients," stated Commissioner Bakke.

The Medical Malpractice Reinsurance Association was established in 1976 by the legislature. It was established to assure the availability of medical malpractice coverage by providing medical malpractice insurers with the necessary financial backstop, i.e. reinsurance, they need to expand their writing of coverage in difficult market situations.

This decision to reactivate the Association resulted from a Department hearing held August 6, 2003 to determine whether medical malpractice reinsurance was available in the New Jersey marketplace. Based on the testimony presented, the Commissioner determined that reinsurance was not "readily available" and that the reactivation of the Association was both a necessary and prudent regulatory measure in order to keep direct coverage available.

Reactivation of the Association is the latest in a series of regulatory actions the Commissioner has taken to manage a nationally challenged medical malpractice marketplace. To date, the Department has:

Addressed the critical area of obstetrics. These doctors have seen limited HMO reimbursements and escalating premiums. The Department of Banking and Insurance has been encouraging HMOs to increase their reimbursements for high-risk OB patients and has initiated an aggressive program to ensure that physicians are getting paid on time by HMOs.

In directing the Association to provide reinsurance, the Commissioner stressed that the Association must be true to the intent of its enabling statute by charging market rates for reinsurance. "The reactivation of the Association will be solely for the purpose of providing reinsurance. In my order, I have set forth the cooperative measures the Department and the Association will undertake to ensure that the Association is activated in a responsible and measured manner," Commissioner Bakke stated. These parameters include:

Commissioner Bakke stressed the importance of continuing to be vigilant in the effort to preserve access to care for New Jersey patients by continuing to carefully manage the most difficult medical malpractice market in over a decade, while the Legislature continues to debate more comprehensive reforms. "This administration has been and remains committed to the patients of New Jersey. We continue to actively manage this very difficult market, directly assist doctors in securing coverage, and monitor companies to guard against abuses. We have and will continue to take our role seriously as both regulators and advocates for the public."

Hearing Officer's Report