BestWeek: New York to Face What Ails Its Medical Liability Market.

OLDWICK, N.J. -- After decades of bandage solutions, New York is in a race against time to repair its ailing medical liability system. But this time, the fate of its largest medical malpractice insurer may be on the line, according to an exclusive story in BestWeek U.S./Canada.

Gov. Eliot Spitzer recently convened a task force, headed by Superintendent of Insurance Eric Dinallo, to prescribe a solution to a market he said is at "a crisis level."

Among the many challenges, New York leaders must soon confront a conundrum: how to bring the state's largest medical malpractice insurer, Medical Liability Mutual Insurance Co., back to financial health without alienating doctors or placing huge financial burdens on other insurers or taxpayers.

MLMIC, also the largest medical liability writer in the United States, faces anticipated claims that may exceed its current surplus. The company, which insures about 65% of New York's physicians, has been unable to control rising medical malpractice costs, and has seen its reserve grow to more than $3.3 billion and policyholder surplus erode to roughly $151 million as of March 31. The last time MLMIC realized a profit was in the early 1990s.

In spite of the financial troubles, MLMIC has benefited from a 1985 New York law that prevents the state from forcing any medical malpractice insurer into liquidation even if the company is insolvent, and a waiver that permits it to discount reserves for unpaid losses and loss adjustment expenses.

Also in BestWeek Europe:

The U.S. subprime mortgage lending crisis is setting off alarm bells in the United Kingdom over possible risks to Lloyd's insurers.

Also in BestWeek U.S./Canada:

Insurers with subprime exposure see perils and promise in the ongoing meltdown of the U.S. subprime mortgage industry.

And in both editions of BestWeek:

The Best's Global Insurance Composite Index finished the week of August 16 up 6.70% from a year ago. The composite index reflects the performance of 177 insurance stocks. The week's top performers were American Physicians Capital, CNA Surety, FBL Financial Group, TransAtlantic Holdings, and Presidential Life.

The bottom five performers were Scottish Re, Meritz Fire & Marine Insurance Co., LIG Insurance Co., Nipponkoa Insurance Co., and China Insurance International Holdings.

BestWeek is published by A.M. Best Co. for insurance professionals. To subscribe, please call A.M. Best's customer service department at [phone], ext. 5742, or e-mail your request to [e-mail].

Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.