SVMIC Slashes Medical Malpractice Insurance Rates Effective May 15, 2010

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.