Day on Torts
You won’t read about this anywhere else.
State Volunteer Mutual Insurance Company, the doctor-owned medical malpractice insurer that insures the vast majority of non-university based physicians in Tennessee, has slashed medical malpractice insurance rates.
The average rate decrease, effective for renewals on or after May 15, 2010, is $23.1% at $1M / $3M insurance policy limits. There are different rates of decreases depending on specialty, dividend status, limits, years in practice, and other factors.
Why the decrease? A letter to insureds attributes the decrease to "the latest downward trend in the frequency of claims …." I have reported on this trend before in this post and others.
But that’s not all. SVMIC also announced a $20,000,000 dividend to its insureds. The dividend will further reduce premiums because it will be paid as a credit on policies renewed during the 12 months beginning May 15, 2010. One-fourth of the dividend will be based on the total premiums paid during the last 5 years. Three-fourths of the dividend will be paid based on paid-claims experience. Doctors who had claims but no paid claims will still receive a merit dividend.
The average rate decrease of 23.1% follows rate decreases of 2.5% in 2009 and 4.2% in 2007. (I cannot put my hands on what happened to rates in 2008. I will try to find out what happened.) I predicated last July that SVMIC would reduce rates again in 2010, but I admit I did not foresee a 23% decrease. When coupled with dividend, many SVMIC doctors will see a premium reduction of over 30% for renewals on and after May 15, 2010.
My guess is that, when inflation is factored in, medical malpractice insurance rates are less today than they were 10 years ago. I will put pencil to paper, try to figure that out, and report it on a later date.