Date:March 4, 1998
To:All Medical Malpractice Insurers
From:Randy Blumer, Commissioner of Insurance (Acting)
Subject:Pending Rule Changes to s. Ins 17.35, Wis. Adm. Code

This bulletin is to inform medical malpractice insurers who insure health care providers subject to the Wisconsin Patients Compensation Fund of the proposed rule changes to s. Ins 17.35, Wis. Adm. Code, and its impact on form filings.

Section 655.23 (4) (d), Wis. Stat., allows our office to promulgate rules as considered necessary for the application of the liability limits under a claims-made policy to reporting years following termination of claims-made coverage, including rules that provide for the use of actuarial equivalents equal to an occurrence policy. The proposed rule relating to the annual aggregate limit specified in s. 655.23 (4) (b), Wis. Stat., provides for the use of an actuarial equivalent for an extended reporting period endorsement. The actuarial equivalent limits will be as follows:

  1. 100% when the coverage period of the policy was 1 year or less, including any retroactive coverage period.
  2. 130% when the coverage period of the policy was more than 1 year but less than or equal to 2 years, including any retroactive coverage period.
  3. 150% when the coverage period of the policy was more than 2 years but less than or equal to 3 years, including any retroactive coverage period.
  4. 160% when the coverage period of the policy was more than 3 years, including any retroactive coverage period.

The proposed changes require these equivalents for unlimited extended reporting endorsements issued on and after January 1, 1999.

Before January 1, 1999, the limits for extended reporting period will either have to comply with the current rule, s. Ins 17.35 (2b) (b), Wis. Adm. Code, which makes the base policy claims-made limits available each year and the extended reporting period is just for reporting, or provide the limits for extended tail endorsements in the proposed rules as stated above. Refer to bulletins dated October 30, 1995, and July 15, 1997, for further information on the current rule.

You should consider the proposed changes when doing any form filings prior to the effective date of the new rule. We will approve filings complying with the actuarial equivalents for extended reporting periods prior to the effective date of the new rule.

If you have any questions about this bulletin or would like a copy of the proposed rule, please contact Jane Kovacik at jane.kovacik@oci.state.wi.us or 608-266-7077.