Average Premiums Reduced by 5.2 Percent for
2006-2007 Policy Year
ISMIE Mutual has announced it will reduce by 5.2 percent the average premiums paid by its 13,000 policyholders in the new policy year beginning July 1, 2006. The announcement came after ISMIE’s Board of Directors meeting on April 5.
As is our usual practice, the actual premium ISMIE physicians
pay will depend upon individual risk factors, including practice
locations, medical specialties, discounts earned and other
variables. (See overview, p. 2-3.) In late April or early May,
policyholders will receive customized premium notifications
that incorporate these modifiers.
“Modest reductions in claims frequency, and a relatively flat
number of claims closed with indemnity payments during 2005
give reason for optimism and suggest that the marketplace may
be stabilizing,” noted ISMIE Mutual Chairman Harold L. Jensen, M.D. “This could be due to an initial ‘halo effect’ of the litigation reforms that doctors worked so hard for and which were passed last year.” Still, Dr. Jensen cautioned, “While results appear promising, it took
Illinois a while to get into this litigation mess, and it will take time to heal.”
Although claims statistics are moving in the right direction, severity (the average amount of each indemnity payment and a crucial factor in the ratemaking process) has continued its upward climb. Independent and ISMIE actuarial experts estimate the ultimate cost of an indemnity claim filed in 2005 will be, on average, more than $600,000, and 2006 claims closed with indemnity payments will surpass $700,000. Once caps on non-economic damage awards pass constitutional muster, there will be more reason to be confident that this alarming trend will reverse. Dr. Jensen noted that experience in other states, notably California and Texas, makes us hopeful.
He also cited the “uneasy trade-off” – increased regulatory oversight of insurers – that occurred in 2005 when doctors helped achieve a $500,000 cap on non-economic damage
awards for medical liability cases. “The Illinois Division of Insurance (DOI) scrutinized
ISMIE’s ratemaking process at unprecedented hearings held in Springfield last year. After
dissecting mountains of documentation and analyzing hours of testimony, the DOI’s findings validated ISMIE’s current rates and our ratemaking process.”
Moratorium on New Business Continues
ISMIE’s team of actuarial, financial and operational experts regularly reviews the need for the moratorium on new business, now in its fourth year. For the time being, the moratorium remains in effect. As a physician-first company,
this is a painful, necessary thorn in the side of all of us.
Exceptions to accepting new business during the moratorium include:
- Newly practicing physicians.
- Physicians who join a currently ISMIE-insured group practice.
Policyholder Resources Abound
ISMIE’s Managing Risk/Risk Rewards program is wildly successful. ISMIE is unique in this effort to blunt the trial lawyers’ dominance in a broken
judicial system. For the 2006-2007 policy year, ISMIE will increase by 50 percent the pool of
funds available for premium discounts for policyholders who participate in this innovative
program. Physicians who successfully complete Risk Rewards activities can reduce future
premiums – and effectively manage their practice risk at the same time. Policyholders will receive ongoing communications regarding new opportunities to participate in Managing Risk.
ISMIE is Here for Physicians: Yesterday, Today, and Tomorrow
In 2006, ISMIE marks its 30th continuous year of partnering with Illinois physicians to provide solid medical liability protection. Doctors founded this company in 1976 when turmoil
pervaded the state’s insurance climate. With Illinois physicians, ISMIE is the only company
that fought through three tort reform crises. And when other medical liability insurance companies fled this insurance market, ISMIE held fast to deliver constant insurance coverage. As a physician-run company, we pledge to always be there for our colleagues, with physician-first service and the best medical liability protection at the lowest possible price.