Data Comparison Confirms Fair Rates for ISMIE
Mutual Policyholders

We are confident of the integrity and efficacy of our rates – based purely and simply on the losses we incur and the expenses of running this company.
ISMIE Mutual Chairman Harold L. Jensen, M.D.

ISMIE Mutual regularly assesses the Illinois insurance market to see how its rates compare with other medical liability insurers in the state. Newly gathered data confirms that ISMIE Mutual policyholders pay among the lowest premiums in Illinois for their medical liability protection. (See chart.)

From a national perspective, however, the picture remains far from rosy. A 2005 rate survey in Medical Liability Monitor, a leading insurance industry trade publication, indicates that while premiums appear to be stabilizing overall, Illinois physicians still pay among the highest premiums for medical liability coverage in the nation. Time and the outcome of expected constitutional challenges to S.B. 475 will tell if our hard-fought battle to pass medical litigation reform will result in lower rates, as it has in other states where reform laws have been in effect for several years. In the meantime, for Illinois, ISMIE Mutual’s pledge remains: To provide the best liability protection at the most reasonable rates.

Rate setting overview

The rate-setting process to determine medical liability premiums is complex. It has evolved over ISMIE Mutual’s 30 years of experience in a volatile insurance marketplace. However, as a physician-owned and operated company, ISMIE Mutual has a clear advantage in evaluating and classifying medical risk. We know the medicine behind it.

Fairness is key. To determine an accurate and precise base rate, two outside actuarial firms provide independent input to supplement the company’s internal actuarial expertise. The base rate is the collective best estimate of the basic premium level required from each insured to cover losses reported over that entire policy year – regardless of how long it might be until those claims are finally resolved. We then determine an individualized annual premium for each physician policyholder, taking into account geographic territory, medical specialty, medical/surgical procedures utilized, actual loss experience, full or part-time practice, discounts earned and other data. All information is carefully considered to ensure that each specialty and county supports its own losses. A family physician in Jefferson County, for example, does not subsidize the losses of a family physician in Cook County, and so on.

In addition to these factors, ISMIE Mutual must incorporate into its rates the expenses of running the company. ISMIE Mutual’s administrative ratio – the amount needed for operations – is a lean 13.5 cents per premium dollar, at the low end when compared to similar physician-owned medical liability companies.

In the spirit of its physician founders, ISMIE Mutual assures fairness and integrity in its rate-setting process, and is committed to providing solid liability protection for the long term.