St. Paul to Cease Writing Medical Malpractice Policies

St. Paul Cos. said Wednesday that it will stop writing medical malpractice insurance, a move that the American Medical Assn. said would create havoc for doctors trying to get insurance.

St. Paul writes about 10% of U.S. medical malpractice insurance coverage, second to Medical Liability Mutual Insurance Co., company spokesman Mark Hamel said.

“Every state where we write medical malpractice is going to be impacted. We write in nearly every state,” Hamel said. St. Paul does have some international medical-liability business, which it also will exit.

The effect in California was not immediately clear. Many hospital and physician groups and insurance experts said they were unaware of the announcement. St. Paul wrote medical malpractice policies for some California hospitals and hospital groups, but spokesmen at two hospital groups said they were not concerned.

Sutter Health Care, which operates 26 hospitals and six large medical groups in Northern California, said there would be no effect on its facilities because they are self-funded.

Adventist Health of Southern California, which operates 1,474 patient beds, said there would be no effect on operations.

St. Paul will exit the medical malpractice insurance business gradually by not renewing policies as they expire, in accordance with regulatory requirements, company Chairman and Chief Executive Jay Fishman said. The process is expected to take about two years.

St. Paul’s shares fell $1 to $46.38 Wednesday on the New York Stock Exchange.