The "single most important thing is that occurrence policies," which MIIX wrote for N.J. doctors, "are good going forward," she said.

An occurrence policy form typically provides coverage for injury claims and lawsuits, which stem from incidents that took place when the policy was in effect, even if such claims and suits are filed after the occurrence policy expires. Insureds using claims-made forms, which only provide coverage for claims actually filed during the policy period, must look to subsequent claims-made policies or to buy tail coverage to cover subsequent suits and charges.

Occurrence policies have been the norm for medical malpractice policies in New Jersey, Ms. Caffrey said, noting that doctors had been concerned that a MIIX insolvency could have pushed future claims into the state's Property-Liability Insurance Guaranty Association.

Noting that Guaranty Association coverage is limited to $300,000, she said, that may be sufficient for auto, but not for malpractice, adding that the limited coverage isn't what doctors bargained for when some purchased $1 million limits of coverage from the Lawrenceville, N.J.-based company.

"Assets on hand are going to be sufficient" to pay claims on existing policies as they come due, she said.

Last week in a statement, the department said that in approving the voluntary runoff, it ordered actuarial reports, which confirmed the sufficiency of those assets.

Outlining the specifics of the runoff plan, Ms. Caffrey said that MIIX cannot write new policies, and that while the company can renew N.J. doctors' policies during the next 90 days, it must cease writing renewals after 90 days. The department also expects MIIX to file a proposal to set up a successor company within 90 days.

That proposal will have to meet N.J. standards of regulatory scrutiny and must be reviewed by the department's solvency office, she said.

She noted that the plan has not yet been approved, clearing up a mix-up that might have developed from a MIIX statement released last Friday, announcing that the MIIX "received approval?for its new business plan."

Referring to a statement released by the department on the same day, she said, "We absolutely did announce the possible formation of a successor company," noting that the dual-announcement of the proposal and the voluntary runoff was intended to give some peace of mind to physicians.

Ms. Caffrey also noted that the department statement had indicated that the possibility of providing doctors with a "seamless" transition, giving them the ability to buy coverage from a company that uses the existing personnel and infrastructure that had served them well before recent problems was worthy of the department's consideration.

But the plan will have to be scrutinized by regulators to make sure it meets standards for capitalization and stability, she said.

She confirmed press reports indicating that MIIX is planning to raise $30 million to capitalize the new company, but referred questions about the potential structure (whether it will be owned by doctors, who would run it, etc.) to MIIX itself.

A company representative did not immediately return a call, but The MIIX Group plans to hold a conference call, which the public can listen to, discussing its first-quarter results tomorrow morning.

The MIIX Group reported a first-quarter net loss of $45.4 million, or $3.38 per share, late yesterday. The loss primarily resulted from a "conservative reserve adjustment" for prior years of $29.5 million, the company announced.

In February, the Group announced that it would put its Lawrenceville Property and Casualty Company operations (which wrote business outside New Jersey) into runoff and reported a $150 million operating loss for 2001.

Ratings for the Group's operating subsidiaries were subsequently downgraded by A.M. Best, which moved them to "C-plus" (marginal) from "B-minus" (fair) in March.

In an April 1 annual report filed with the Securities and Exchange Commission, MIIX also said that the report of its independent auditor, Ernst & Young, contained an explanatory paragraph raising doubt about the company's ability to continue as a going concern. The SEC filing also said that risk-based capital was at a level, which required the Group to submit a corrective action plan for MIIX Insurance Company to the N.J. department.

Ms. Caffrey said that the department's primary concern is the stability of the market for N.J. doctors, noting that the department is encouraging other malpractice insurers to offer coverage.

"We're not just hanging our hats on MIIX" and its proposed new company, she said, noting that the department is also encouraging the acceptance of claims-made policies, which could provide more sustainable coverage.

In addition, she said that the department is also considering regulatory changes that would allow the sale of medical malpractice policies that cover defense costs within the stated limits of liability.

While the department's "top priority" is availability, she said that defense-within-limits policies could be more affordable, noting that medical malpractice is the only professional liability coverage in New Jersey where coverage provides for defense costs outside of the limits.

Noting that the department regulates both banks and insurance, Ms. Caffrey also said that insurance regulators are working closely with the banking division to arrange some type of premium financing for insureds. That would help physicians deal with the spike in premiums they are likely to experience on renewals, smoothing out the big bumps over time, she said.