SVMIC – 2008 Financial Results – Part 4

I have released three prior posts on the financial condition of State Volunteer Mutual Insurance Company – click here to read them:  Part 1, Part 2, Part 3.

The bottom line is that conservative financial management at SVMIC has permitted the company to accumulate a quarter of a billion dollars in net worth, even as the number of policyholders has declined 4% of the last year.

So how is that impacting rates?

In 2007 SVMIC reduced rates for Tennessee doctors by an average of 4.2%.  Now, the conpany will decrease rates again for new and renewal business written as of May 15, 2009.  The average rate decrease will be 2.5%  Some doctors will see greater declines (e.g. pediatrics – down 10%, interventional pulmonary medicine, down 5.3%, maternal and fetal medicine down 2.7%).   Only emergency medicine doctors will see a rate increase (5.0%).    Thus, out of the 10, 391 doctors insured by SVMIC in Tennessee only 204 will receive a rate increase.   IN 2007 74% of the insureds received a rate decrease and 26% received a rate increase.

These rate changes are based on policy limits of $1,000,000 / $3,000,000.  Here are some examples of what Tennessee doctors with 5 over more years in practice pay for insurance:

Type of Doctor                                          $1M / $3M                            $2M / $4M

Pediatrics – No Surgery                            $8510                                     10,049

Infectious Disease                                    $9302                                      10,887

Radiology – Major Interventional             $17,536                                   20,971

Anesthesiology                                          $14,606                                    17,425

Emergency Room                                      $36,263                                    43,407

Gen. Surgery – No Cosmetics                 $40,504                                    48,438

Neurological Surgery                                $54, 698                                   65,404

Maternal and Fetal Medicine                    $58,207                                    69,600

These are list prices.  There is a 10% discount for those physicians who attend the annual loss prevention seminar.   Those doctors who are designated as "full-time faculty" at a teaching institution pay only 60% of the normal rate.  Multi-physician groups can earn up to a 30% discount for other loss prevention, peer selection, and record-keeping practices.   Those who pay for the entire year earn a 5% discount.

Two final notes.  First, he 2009 rate increase probably does not yet take into account the substantial changes to the medical malpractice law in the areas of pre-suit notice and certificates of good faith.  There is no way to know that for certain, but (a) SVMIC is a conservative company and (b) the changes just came into effect October 1, 2008 and July 1, 2009.  I predict further rate decreases in 2010.

Seond, in the event this four-part series is viewed as a complaint about capitalism in general or the business practices of SVMIC in particular, readers may wish to view my thoughts on the subject set forth in this post of October 11, 2008.