When one thinks of activists, doctors aren't the first people who come to mind. But Illinois doctors took matters into their own hands during the 1970s, when an explosion of medical liability litigation led to an insurance crisis that is revisiting parts of the country right now. The founding of ISMIE Mutual, now Illinois' largest medical liability insurer, was a result of that crisis. Its resounding success is a direct result of the can-do mentality that sought a solution to the malpractice crisis of 1975. It also demonstrates the power of organized medicine, and the leadership role that physicians can – and should – play in their communities throughout Illinois.
Faced with tremendous losses in the early 1970s, liability insurer The Hartford announced it would terminate its ISMS sponsored operations in Illinois in 1976. This was grim news, given that the few carriers remaining planned to charge extortionate rates, not renew high-risk specialties, and refuse to consider how the liability crisis could be solved in the state. That same year, the Illinois State Medical Society (ISMS) formed a medical liability crisis committee that urgently began examining possible solutions before the end of The Hartford's current policy year.
Unfortunately, the available solutions looked pretty bleak: other than practicing medicine without insurance, options for physicians were to participate in an underwriting program sponsored by the Illinois Department of Insurance, or create a physician-run insurance company with their own money. From the start, the Department of Insurance option was almost as unattractive as the no-insurance option, since physician defense would not be a top priority for the agency, and costs would just be passed on to policyholders. Moreover, a state-run program would not address the root cause of the problem: the flood of frivolous medical liability claims driving up the cost of medical liability insurance in Illinois.
The final option, for Illinois physicians to create their own insurance company, seemed like a long shot. After all, if the large commercial insurers were fleeing the Illinois market, why would physicians want to risk their own assets for what appeared to be a very risky venture? County medical societies and specialty societies throughout the state held meetings with their constituencies to discuss the feasibility of a physician-owned insurance company.
With their backs to the wall, physicians across the state resolved to start a physician-owned insurance company. Faced with very little time to start the company, timing was critical – The Hartford's policy year expired on June 30, 1976. After exacting a promise from the Department of Insurance to expedite licensing, ISMS met with an actuary to determine how much capital and premium would have to be raised to start and run a viable company. While the amount was steep (premium, plus 100 percent of premium per physician for a Guaranty Fund Certificate to fund the company), over 6,000 Illinois physicians sent in their checks and became owners of the Illinois State Medical Inter-insurance Exchange now known as ISMIE Mutual.
ISMIE Mutual was officially born on July 1, 1976. Its mission, from the beginning, was to grow and become an insurance company owned and led by physicians. The Physician Board of Governors would make all key decisions; the Physician Review Committee (PRC) would review settle/defend decisions for all claims; and the Physician Review and Evaluation Panel (PREP) would make all underwriting decisions.
ISMIE Mutual's core beliefs led to a unique business strategy: ISMIE Mutual pledged to aggressively fight defensible claims, even though claims defense is far more expensive than routinely settling claims, as many insurers do. Additionally, ISMIE Mutual pledged to provide coverage for all specialties, regardless of risk or territory, unlike many other companies that cherry-pick what they will and will not cover. ISMIE Mutual's leadership soon discovered that costs could be managed through conservative underwriting and ongoing risk management education, while aggressive claims defense acted as a deterrent to frivolous lawsuits.
As a product of the hostile medical liability environment in Illinois, ISMIE Mutual also pledged to remember its roots. In the 1980s, ISMIE Mutual participated with the Illinois State Medical Society in two major tort reform initiatives in Springfield, resulting in caps on punitive damages in medical liability verdicts. While the Supreme Court ultimately ruled those caps unconstitutional, components of those reforms (such as the Medical Malpractice Act) are in effect today. More importantly, discussions over patient rights, managed care and physician advocacy are now in the national spotlight, demanding action from Washington.
More than 30 years ago, Illinois physicians came together and proved that they could change the face of Illinois medicine for the better by pooling their resources and advocating on behalf of patients throughout the state. The ISMIE Mutual - ISMS collaboration demonstrates that physicians can, and should, take their fight for quality health care and physician advocacy to Springfield and beyond. There is too much at stake to risk inaction. Fortunately, the physicians who founded ISMIE Mutual understood that message loud and clear.