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2009

Annual Report

Trust & Service THE ISMIE DIFFERENCE


Table of

CONTENTS

Message from the Chairman . . . . . . . . . 2 Risk Management . . . . . . . . . . . . . . . 4 Underwriting . . . . . . . . . . . . . . . . . . 6 Claims . . . . . . . . . . . . . . . . . . . . . . 8 ISMIE Mutual’s Financials . . . . . . . . . . . 10 Supreme Court Overturns Medical Litigation Reform . . . . . . . . . . . 12 ISMIE Mutual Resource Guide . . . . . . . . 14 ISMIE Mutual Board of Directors . . . . . . . 21

2009 ISMIE Mutual Annual Report

1


Message from the

CHAIRMAN

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2009 ISMIE Mutual Annual Report


Dear Colleagues: ISMIE Mutual Insurance Company is the medical liability carrier you can trust. We work hard to protect you and your practice every day. We take that responsibility seriously and will always be here for you, our policyholders, as your partner and advocate. We are proud of our reputation as a physician-owned and governed company that provides the very best in service to those we insure. For over 30 years we have continuously insured all specialties throughout Illinois in good times and bad. At ISMIE Mutual, policyholders trust that we are in the Illinois market to stay. This year’s annual report summarizes ISMIE Mutual’s accomplishments in 2009. Within the report you will find information encompassing all aspects of your company and our commitment to policyholders. These include: »» Information on our innovative Managing Risk Partnership Program, which builds on our Managing Risk experience from the past five years and provides proven ways for policyholders to further minimize liability risk while also earning premium discounts. »» Based on improved loss experience we were able to hold the line on our 2009-2010 rates, with no base rate increases for policyholders who renewed on or after Oct. 1, 2009. »» In 2009 our improved loss experience allowed us to continue providing dividends for the third consecutive year, issuing $20.7 million to eligible policyholders. To ensure our policyholder physicians are protected in this unstable legal climate, we work on your behalf with outside independent actuaries to set rates appropriately. Through our dividend program, when a year unfolds better than had been expected ISMIE Mutual then shares the benefits of that improved loss experience with our policyholders. ISMIE Mutual continues to work with our policyholder partners to minimize liability risk and share the benefits of improved loss experience. In 2010 we look forward to continuing to provide you with our unparalleled PhysicianFirst Service. You can rest easy knowing that ISMIE Mutual is always behind you, protecting you and your practice. Thank you for your trust in the coming year. We will continue to prove it is well placed. Trust and Service are the ISMIE Difference. Sincerely,

Harold L. Jensen, MD Chairman, Board of Directors ISMIE Mutual Insurance Company

2009 ISMIE Mutual Annual Report

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More Risk Management

SUCCESSES

Premier Partners will learn the skills and techniques needed to manage everyday liability risk and be able to demonstrate the application of those skills.

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2009 ISMIE Mutual Annual Report


2009 was another successful year for ISMIE Mutual policyholders who participated in our Managing Risk – Risk Rewards program. Their participation provided them with the tools needed to effectively manage liability risk while earning premium discounts and continuing medical education credits. The number of Risk Rewards activities completed in 2009 was impressive: »» Nearly 7,000 policyholders participated in nearly 167,000 activities »» About 1,800 policyholders completed practice assessments »» More than 375 policyholders completed our Fellowship and Fellowship Continuing Recognition (CR) Programs As part of ISMIE Mutual’s continued dedication to partnering with you, our policyholder, to help minimize the risk of medical liability, we developed an innovative risk management program. New for 2010, ISMIE’s Managing Risk Partnership Program is built on our Managing Risk experience from the past five years. It provides policyholders proven ways to further minimize liability risk while also earning premium discounts. This exciting new program gives you increased flexibility to become either a Managing Risk Premier Partner or a Managing Risk Partner. Premier Partners will learn the skills and techniques needed to manage everyday liability risk and be able to demonstrate the application of those skills. Partners may sample a variety of our Risk Rewards coursework – either in person or online – to get the tools and practical advice needed to protect their practices from a liability lawsuit. Simple. Efficient. Effective. ISMIE Mutual believes this partnership provides a superior way to protect against medical liability claims and earn your Risk Rewards discounts. As always, all Managing Risk courses are offered at no charge to all active policyholders – and in most cases these courses also offer AMA PRA Category 1 Credits™. ISMIE Mutual will continue to look at innovative ways to work together to minimize the risk of medical liability. The new Managing Risk Partnership Program is just one example of how ISMIE policyholders have more opportunities than ever to manage their risk while running their practices. Trust ISMIE Mutual - where service is our specialty.

2009 ISMIE Mutual Annual Report

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Trust in ISMIE’s

UNDERWRITING

As the premier provider of professional liability insurance to Illinois physicians since 1976, ISMIE Mutual offers products that maximize protection and minimize worry. Our goal is to provide you with insurance protection that meets your needs every day. That’s why ISMIE Mutual’s underwriting team partners diligently with our policyholders to ensure you have appropriate liability insurance to protect you and your practice. Our experience, gained over more than 30 years in Illinois, gives us expertise in 10 territories and 23 groupings of specialties. That means we provide coverages and set rates according to your unique practice needs – your specialty, your procedures, your location and your underwriting profile.

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2009 ISMIE Mutual Annual Report

ISMIE Mutual began offering coverage in 1976, to meet the specific needs of physicians and their practices. That core focus remains the same today. We offer flexible coverage solutions for your changing practice, and tailor-made policies are also available. Trust in ISMIE Mutual for thorough, solid protection. With our sound underwriting principles and expertise we will make sure your coverage meets your professional liability needs. In 2009, ISMIE Mutual maintained the same base rates for 2009-2010 with no base rate increase for policyholders renewing on or after Oct. 1, 2009. We also continued to offer our premium financing plan so our policyholders had additional payment flexibility if desired.


TO P F I V E I L L I N O I S I N S U R E RS (2008, latest figures available at press time)

55.3%

ISMIE Mutual AP Capital Group Berkshire Hathaway American International Group, Inc ProAssurance Group Individual companies that hold less than 3.2% of the Illinois market

28% 3.2% 3.8%

4.5%

5.2%

Source: A  .M. Best’s Data Services, Best’s State/Line Report – Property/Casualty – US

As we look forward, those same flexible options are available in 2010.

Year after year, ISMIE Mutual continues to look for ways to better serve you.

We also streamlined our web site and now offer all of your policy documents and information in one easy-to-access section online – your MyISMIE page. Log on to www.ismie.com for access to your policy summary, billing information, loss history letter and more.

Trust in ISMIE Mutual, where our physician policyholders always come first.

2009 ISMIE Mutual Annual Report

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Providing You with Physician-First

CLAIMS SERVICE

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2009 ISMIE Mutual Annual Report


Although experiencing a claim may be daunting, ISMIE Mutual is here to assist you in every way possible. As your partner in the litigation process, your ISMIE Mutual defense team is dedicated to providing you with our hallmark Physician-First Service to help make an unpleasant situation less difficult. At ISMIE Mutual we understand that a medical liability claim is stressful, but rest assured that we work diligently as your advocate to defend your skills, your integrity and your good name. Our policyholders can be confident that ISMIE Mutual will vigorously pursue an aggressive claim strategy. In 2009, ISMIE Mutual enjoyed a favorable percentage of defense wins on behalf of our policyholders and took 131 cases to trial. It is important for us to know that we are meeting your needs during the claims process. That is why we ask policyholders facing liability claims to rate their satisfaction with us, through our claims monitoring surveys. Last year policyholders measured their satisfaction with ISMIE Mutual’s claims service slightly higher than the prior year, rating our Physician-First Service

AV E R A G E I N D E M N I T Y P E R PAID CLAIM $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 0

The average indemnity per paid claim was under $600,000 in 2009.

at 9.4 out of a possible high score of 10. This demonstrates the success of our Physician-First Service approach with our policyholders when they need us most. Regardless of outcome, physicians who experience a trial overwhelmingly rate our claims service as outstanding. ISMIE Mutual will continue to provide our policyholders with exceptional claims service. You can trust that at ISMIE Mutual, you always come first.

2009 ISMIE Mutual Annual Report

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Trust ISMIE Mutual’s

STRONG FINANCIALS ISMIE Mutual’s focus on sound financial management continued in 2009. This approach ensures the company’s stability so that it will always be here for its policyholders. You can trust in ISMIE Mutual’s strong financial future.

O P E R AT I N G E X P E N S E S ISMIE Mutual’s conservative approach to management and operations is reflected in overall operating expenses. 46.6%

34.6%

1.9%

6.6%

10.3%

INVESTED ASSETS The majority of our investments are in high quality, fixed income securities (bonds). This demonstrates that ISMIE Mutual’s premium rates do not follow the financial markets. 86.3%

2%

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2009 ISMIE Mutual Annual Report

3.9%

7.8%


ADM I N I S T R AT I V E E X P E N S E RATIO Compared to Industry Peer Companies (2008, latest figures available at press time)

Source: A.M. Best’s Aggregates & Averages, Property/Casualty – US and Canada

Our ratio of administrative expenses to premiums was less than 18 percent, in the lower half in a group of comparable medical liability companies. This ratio only includes ISMIE Mutual’s administrative costs for 2009. Expenses for claims incurred or defense costs are not included.

At ISMIE Mutual, our policyholders trust in a strong financial future. 2009 ISMIE Mutual Annual Report

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Supreme Court Overturns

M E D I C A L L I T I G AT I O N REFORM

Illinois’ meaningful medical litigation reform bill was passed in 2005 and quickly challenged. On Nov. 13, 2007, the law was deemed unconstitutional by a circuit court judge. ISMIE Mutual and the Illinois State Medical Society appealed the ruling to the Illinois Supreme Court, on behalf of Illinois physicians and patients. On Feb. 4, 2010, the Illinois Supreme Court undid the will of millions of people and overturned the state’s medical litigation

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2009 ISMIE Mutual Annual Report

reform law. The court did so even though the last five years have proven that meaningful litigation reforms work and have been working in Illinois. ISMIE Mutual strongly disagrees with the ruling. It has joined Gottlieb Memorial Hospital in petitioning the Illinois Supreme Court for a rehearing. The petition states that the court had misinterpreted a previous Illinois Supreme Court decision that upheld the state legislature’s ability to change


“We’ve been down this path before and will actively continue the fight for fairness in Illinois courts.” Har old L. Jensen, MD Chairman, Board of Directors ISMIE Mutual Insurance Company

common law damages in alienation of affections cases. Therefore the 2005 medical litigation reform bill was not an unconstitutional infringement of the doctrine requiring separation of powers between the legislature and judiciary.

said Harold L. Jensen, MD, ISMIE Mutual chairman. “We vehemently disagree with the court’s decision and are extremely disappointed. We’ve been down this path before and will actively continue the fight for fairness in Illinois courts.”

“Since passage of the Illinois reform law, patient access to health care has expanded, frivolous lawsuits have ebbed and insurance rates have leveled off or decreased for many doctors. This is practical proof that the law is working,”

Rest assured that ISMIE Mutual is committed to stay in this fight for you and your patients.

2009 ISMIE Mutual Annual Report

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2009 ISMIE Mutual Annual Report


ISMIE Mutual Board of Directors

2 0 0 9 - 2 01 0 Harold L. Jensen, MD, – Chairman Joan E. Cummings, MD, – Vice Chairman Walter W. Whisler, MD, – Secretary-Treasurer Proctor R. Anderson, MD Alejandro Aparicio, MD Craig A. Backs, MD Dennis M. Brown, MD Peter A. Brusca, MD Edward J. Fesco, MD Richard A. Geline, MD Henri S. Havdala, MD Jane L. Jackman, MD Theodore M. Kanellakes, MD Tim C. Kisabeth, MD William E. Kobler, MD James L. Milam, MD Robert J. Oliver, MD Sandra F. Olson, MD Wayne V. Polek, MD Richard L. Sperling, MD Merita R.C. Tan, MD

2009 ISMIE Mutual Annual Report

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2009 ISMIE Annual Report