Day on Torts
Did you hear about the State Volunteer Mutual Insurance Company rate increase? No, you didn’t – because it didn’t happen.
Typically the media gets a press release from SVMIC saying that insurance is increasing X% and we hear from the TMA that the world is coming to come to an end as a result of it.
This year, nothing. Recall of course that the inflation rate in 2007 was close to 3% and this year it is running over 4%. The health care inflation rate is almost double the normal inflation rate. Thus, is would be reasonable to assume rates would increase every year.
Last year, 74% of the doctors insured by SVMIC got a rate decrease and 26% got an increase.
What’s going on? SVMIC is making enormous profits, that is what is going on. In 2007 after-tax profits were reported at $30,463,000, up almost 30% from a year earlier. (Total after-tax profits for the last 5 years are approximately $91,000,000.) Surplus, the insurance industry equivalent of net worth, increased almost $28,000,000 in 2007 to a total of $245,000,000. This follows a $33 million dollar increase in 2006 and a $16.4 million dollar increase in 2005. Net admitted assets total led $941,000,000 at the end of 2007, up over $70,000,000 from one year earlier. The Company should hit a billion dollars in assets in 2008 or the first quarter of 2009.
So, it makes perfect sense that SVMIC isn’t raising rates – it doesn’t need to. And since it is a mutual company, owned by the insured doctors themselves, why in heaven’s name would they raise rates when it is unnecessary to do so.
I wonder why we haven’t seen a press release that says that?