SVMIC Rate Increase – NOT

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?