Hoping to avoid the fate of an increasing number of troubled medical malpractice companies, the state’s largest carrier of such insurance will stop accepting new business Jan. 1 to maintain its financial health.
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ISMIE Mutual Insurance Co. says it has reached its limit on the number of doctors it can insure and still maintain adequate surpluses given the dramatic increase in policyholders in recent months. As of Nov. 1, the company had 13,788 policyholders, an increase of 15 percent from the end of 2001.
ISMIE has been garnering new business as the malpractice crisis elsewhere in the country has caused an increasing number of malpractice insurers to bleed red ink or get out of the business.
In the malpractice industry, new business isn’t always a good thing, especially in the current climate. Larger compensatory settlements, overall health-care inflation and a bear market have harmed investments and threatened the surpluses of medical malpractice companies.
But so far, Chicago-based ISMIE has been able to ride out the storm, reporting earlier this year a $240 million surplus and a healthy A- rating from A.M. Best.
“We are trying to control this before we get into any danger,” said Dr. Harold Jensen, a Frankfort internist who is chairman of ISMIE, an affiliate of the Illinois State Medical Society. “If we let our surplus erode, we threaten our viability. We are being prudent.”
Earlier this year, ISMIE increased doctors’ premiums an average of 15 percent. Although that was high in comparison to its recent rate hikes, ISMIE’s rates this year have been in line with or below those of many malpractice insurers. Some areas of the country are seeing rates rise 80 percent or more, according to Medical Liability Monitor, a Chicago-based publication that tracks the medical malpractice industry.
Although ISMIE realizes the plight of physicians searching for a malpractice carrier with reasonable rates, Jensen said the company also has to be mindful of its fiduciary responsibility to its policyholders.
“This moratorium enables us to preserve our disciplined underwriting philosophy and the quality product we now offer physicians well into the future,” Jensen said.
Still, there will be some exceptions after Jan. 1. Doctors who are part of clinics already insured by ISMIE and doctors fulfilling their residencies will be able to buy malpractice insurance from ISMIE.
Next spring, ISMIE will re-evaluate the moratorium.
Taylor to leave board: Pam Taylor, the longtime chairwoman of the controversial Illinois Health Facilities Planning Board, will not be re-appointed to the board after more than two decades of service, according to a spokesman for Gov. George Ryan.
Under Taylor’s reign, the board has been the subject of intense criticism from state lawmakers and hospital executives who say the board does little to control rising health-care costs while ignoring its own rules in dealing with politically connected lobbyists. The board regulates health facility expansions and major medical equipment purchases.
A longtime Republican fundraiser, Taylor, of Danville, was first appointed by Gov. Jim Thompson and re-appointed by Gov. Jim Edgar. Although her term expired a couple of years ago, she was allowed to continue to serve until a decision was made on her seat. No replacement has been named.
Taylor said she was asked to serve again but decided it was time to give someone else a chance. “They asked me to serve, but I refused to,” Taylor said Wednesday. “I think I have done it long enough.”