What is ISMIE Mutual’s A.M. Best rating?
ISMIE Mutual Insurance Company’s rating from A.M. Best is currently B+ (good). This means ISMIE Mutual is considered a secure company. In issuing this rating, Best recognized ISMIE’s long term viability in the Illinois market by upgrading our rating, to “stable.”
What is an A.M. Best rating?
A.M. Best is a rating agency of medical liability and other carriers covering a broad range of insurance lines. A rating by A.M. Best is representative of Best’s opinion of an insurer’s financial strength and that insurer’s ability to meet ongoing obligations to its policyholders.
How does A.M. Best determine a rating?
The rating process by A.M. Best is not limited to items which directly relate to an insurer’s claims paying ability. The process is complex, involving both quantitative and qualitative analysis, including:
- Profitability analysis
- Underwriting experience
- Investment income
- Capital generation analysis
- Leverage analysis
- Loss and loss adjustment expense reserve development
- Liquidity analysis
- Cash flow
Many of these items indicate a company’s financial strength, which is of critical
importance in the long run. This is particularly important to medical liability, which historically has exhibited extreme swings in volatility. It is the financial strength of an insurance company that provides the resources necessary to withstand the “ups and downs” of the medical professional liability market.
Will ISMIE Mutual be considered for a higher rating?
Annual meetings are held with A.M. Best to review ISMIE Mutual’s financial and
operational results from the preceding year. These meetings generally take place in the spring, with a rating decision issued by A.M. Best shortly thereafter. Emphasized at the most recent meeting were the new medical litigation reforms signed into law in 2005, a decrease in claims frequency, innovative programs to successfully manage risk such as our Risk Rewards program, and careful overall financial management and reserve philosophy by the company.Ironically, if ISMIE Mutual denied its roots and instead focused on developing a “profit margin” to build more financial surplus it would likely receive a higher A.M. Best rating. Although it is important to maintain its financial viability to meet its claims obligations for the long term, ISMIE Mutual’s objective has never been to develop a high profit margin.
What about other companies in Illinois and their A.M. Best rating?
Most medical liability insurance carriers doing business in Illinois, both physician-owned and commercial, experienced downgrades in their A.M. Best ratings in 2002 or 2003. In the past year or so some of them, including ISMIE Mutual, were upgraded.
A number of these same carriers previously left Illinois, while citing it as an unprofitable market. Now that litigation reforms are Illinois law due, largely to the work of ISMIE Mutual, the ISMS and our respective members and policyholders, these companies are returning to this state and touting their upgraded A.M. Best ratings as a marketing tool.
Clearly, while it is an important factor in an overall evaluation of a medical liability
insurance carrier, an A.M. Best rating alone does not guarantee a company will continue be here for the physicians of Illinois.