The Pennsylvania Medical Society Liability Insurance Co., nicknamed PMSLIC, also said on its Web site that it will insure new clients beginning Jan. 1, dropping three-year-old restrictions.

A spokeswoman for PMSLIC said the changes resulted from a combination of past rate increases, withdrawing from New Jersey, dropping some large group and institutional accounts, and other policy adjustments.

Since 2000, PMSLIC has raised premiums by double digits each year, including increases of 40 percent in 2002 and 54 percent in 2003.

In 2002, PMSLIC stopped writing policies for physicians, unless one joined one of PMSLIC's insured groups. That decision came as at least a half-dozen major medical-malpractice insurers either left Pennsylvania or went out of business, forcing many physicians to insure themselves or accept even higher rates from the state's insurer of last resort.

PMSLIC, which is a subsidiary of the San Francisco-based NORCAL Mutual Insurance Co., had 11.2 percent of the medical-malpractice market in 2004, making it Pennsylvania's largest, according to the state Department of Insurance.

The company is not the only insurer to keep rates flat. Connecticut's largest insurer, Connecticut Medical Insurance Co., also announced earlier this month that rates would not go up in 2006.

"That indicates that the rate increases that have been so dramatic in the past have been so effective in bringing the industry back into economic viability," said Lawrence Smarr, the president of the Physician Insurers Association of America.

Joseph Roethel, an assistant vice president for the ratings agency A.M. Best Co., said rate increases around the country are easing as companies' finances catch up to claims payouts.

Doctors' groups were lukewarm to the news, noting that rate increases of the past five years remain intact. To help doctors afford their insurance bills, the state has allocated $660 million over three years, financed largely by taxes on cigarette purchases.

The subsidy ends on Dec. 31, and the Legislature has yet to take up the issue of whether to approve the subsidy for another year.

The reasons behind the rate increases are hotly disputed.

President Bush and other Republicans have aligned with doctors, hospitals and insurers in blaming lawsuits and jury awards for the run-up in rates. However, Democrats, lawyers and victims groups say the steep increases are cyclical, created by insurers that low-ball premiums to capture more business in competitive markets.

To help stabilize insurance premiums in Pennsylvania, the state Legislature and Supreme Court in the past three years changed the way medical-malpractice lawsuits are handled. One-third fewer medical-malpractice cases were filed in 2004, but Roethel said it will take longer for those changes to affect the level of insurance payouts and claims.