Jensen Presents Myth-Busting Testimony
in Springfield

To dispel the myths that have deadlocked advancement of meaningful reform legislation, ISMIE Mutual Chairman Harold L. Jensen, M.D., delivered testimony at the first Illinois House Judiciary Committee hearing in Springfield last month.

Dr. Jensen addressed the hottest topics fueling the debate, including rate-setting practices, insurance reform and caps on non-economic damage awards.

Multiple Factors Affect Rates

"The doctors who established ISMIE, who were also policyholders, wanted the rates to be fair," Dr. Jensen told the committee. "Consequently, we take a very methodical approach to ensure that our rates are consistent with risk exposure."

He noted:

• “The most important trend affecting insurance rates is the frequency and the severity of claims.”
• Rating territories are used to help determine rates. “We use 20 different groupings of physician practices, clustered by risk,” he explained. “The territories and risk categories are not theoretical … they are based on almost 30 years of ISMIE underwriting and claims experience.”
• Litigation reform opponents continue to circulate myths: There is no crisis; a few “bad doctors” are responsible for crisis-related costs; ISMIE Mutual’s rates follow the stock market. Another myth: Since 80 percent of lawsuits filed don’t result in payment, premiums should, therefore, be less. Dr. Jensen clarified: “Each case, regardless of outcome, has to be defended … and they are defended at a five-year cumulative cost to our policyholders of $150 million dollars … all to defend cases without merit, and thus driving premium costs even higher.”

Burdensome Regulations Not Needed

“ISMIE Mutual is already heavily regulated by the Illinois Department of Insurance … the state agency charged with ensuring that insurance companies have enough money to protect policyholders and the public,” Dr. Jensen noted to further demonstrate that insurance companies are not the culprits of the crisis. “ISMIE Mutual files exhaustive financial statements annually with the department, where they are open to public scrutiny.”

In a statement to the press previous to the hearings, Dr. Jensen stated that “… insurance reform will not solve our state’s litigation crisis. What we need is to improve the legal environment and encourage liability insurers to come to, not flee from, Illinois. Doctors need more choice for liability insurance.”

Dr. Jensen concluded with the case for caps on non-economic awards. “(Caps) stabilize insurance rates and have done so in states across the country,” he said. Dr. Jensen made it clear that the caps proposed in ISMIE Mutual-supported legislation (H.B. 705 and S.B. 150) in no way limit the part of the award that provides compensation for future medical care, loss of wages and more. ISMIE Mutual“ … firmly believes that the legal system should fairly compensate those patients injured by medical negligence,” he said, “but exorbitant, non-economic awards must be controlled before more doctors leave Illinois and further affect the access of patients to health care.”

To close, Dr. Jensen offered the judiciary committee ISMIE Mutual’s help in working toward liability cost containment. “We have a strong track record of solid management, physician advocacy and fairness in our business operations. What we sorely need now is a similar philosophy in the courts.”

Additional hearings on caps, insurance and medical discipline continue through March. To review Dr. Jensen’s complete testimony, go to www.ismie.com.