Policyholder Service Assured as Rate Increase Jolts Profession

ISMIE Mutual's leadership acknowledges the challenges for its policyholders as the July rate increase takes effect. "This poses an enormous burden for policyholders and their patients, and we deeply regret that the deteriorating civil justice climate left us little choice but to act," said Harold L. Jensen, M.D., ISMIE Mutual chairman.

The decision to raise rates came after intense research and analysis by ISMIE leadership, including its board of directors - practicing physicians affected by the soaring rates, too.

Addressing concerns

The lines of communication are humming at ISMIE, as policyholders respond to the rate increase with questions and comments. Inquiries are expected and welcome, and underwriters are standing by to assist policyholders via phone or e-mail. "Staff will share information about rate increases based on specialty and geographic zone and dig deep to flesh out possible options," said Dr. Jensen. "We're open to receiving new or updated information that could affect a policyholder's rate."

A market-driven decision

The increase in the annual base rate by 35.2 percent affects almost 13,000 policyholders. Many physicians experienced premium hikes well in excess of 35 percent due to a reduction in discounts. Responsibility for the unavoidable rate increases lies primarily with external factors. Among them are:

• A volatile medical liability climate - Illinois is on the list of states experiencing a full-blown medical liability crisis.
• Dramatic rise in payout per claim - In the last two years, the company's average payout per claim climbed 59 percent to $612,000.
• Alarming awards for non-economic damages - In 2002, non-economic damages totaled 92 percent of the average total monetary value awarded by a jury, compared with 63 percent in 1997.

In addition, the number of claims reported to ISMIE jumped 36 percent from July 2002 through March 2003, contributing to greater overall defense costs for ISMIE, regardless of how many of those claims have merit.

Putting policyholders first

ISMIE has long prided itself with being there for policyholders "when it matters most." Still, the company's reputation for striving to keep policy rates in check has been undermined by an unpredictable market. Communications regarding the rate increase reference ISMIE's non-profit roots and physician ownership. "Our philosophy of operation has been a conservative one, charging only the rate level we need to preserve the security of future claims pay-outs for physicians and patients," noted Dr. Jensen.

A firm commitment

Keeping future rate increases at bay means calming the current medical liability crisis. Today's huge plaintiff verdicts, especially for non-economic damages, have a direct influence on medical malpractice insurance rates. Tomorrow's hope is federal tort reform, and ISMIE will continue to be an active leader in these efforts.

History illustrates ISMIE's resiliency to weathering insurance crises. According to Dr. Jensen, the company pledges to keep its policyholders informed and to demonstrate its mission: "… to provide a strong and stable source of medical liability coverage for doctors and for patients injured through medical negligence.

To contact an ISMIE representative about your questions and concerns:

Call 1-800-782-4767
E-mail uwtg@ismie.com