Medical Negligence Insurer Posts Record Profits
Experts agree that Illinois' recent cap on medical negligence lawsuits has yet to have an impact on lawsuits, but that didn't stop the state's largest medical negligence insurer, ISMIE, from posting record profits, bolstering arguments that the cyclical nature of the insurance industry -- low profits from investment holdings and high premiums, followed by high profits from investment holdings and premium reductions (see graphic at left).
From Crain's Chicago Business:
The state's biggest malpractice insurer has posted its biggest profit since the 1980s, increasing pressure on the company to cut rates that have surged in the past five years.
Doctors who lobbied alongside ISMIE Mutual Insurance Co. two years ago to persuade Illinois lawmakers to limit jury payouts for malpractice victims are still awaiting a break from lofty premiums. ISMIE's $50-million profit and CEO Alexander Lerner's $1-million pay in 2006 puts the rate issue back in the spotlight.
"They're making a lot more money now, and we still haven't seen our rates go down," says Ellen Brull, a partner at a family practice in Niles who has seen her base insurance rate almost double since 2003 to $19,373 last year. "I would expect major reductions." [....]
The brightening financial picture for ISMIE mirrors a national trend: a drop in physician malpractice lawsuits, reflected in the insurers' bottom lines and reduced premiums. That has led critics of the Illinois malpractice caps to assert that the cyclical nature of the insurance business — not a spike in gratuitous jury payouts — were to blame for the rate crisis. In 2005, state lawmakers capped pain-and-suffering judgments against doctors at $500,000 a case and against hospitals at $1 million.
This article from a pro-business publication is yet another eye-opener for those doctors still gullible enough to believe that medical negligence costs have anything to do with rising premiums. The article notes, for example, that ISMIE CEO Mr. Lerner received a 2% raise this year, boosting his salary to a cool $1 million, and three other executives made at least $747,000. Doctors should remember that every time they look at their insurance bill. Read more...
