SVMIC

Last Friday a Memphis jury awarded almost $24M to a woman and her husband in a civil suit arising out of what the jury found to be medical negligence arising from the failure to promptly diagnose breast cancer. The woman is in the last weeks of her shortened life.

It is my understanding that the defendant did not make a settlement offer and in fact that the doctor refused to authorize any offer. I do not know if this is correct. I do not know if the case could have been settled. I do know it is hard to make progress on settlement negotiations if one side or the other refuses to discuss settlement.

Many insurance companies that provide professional liability coverage to physicians give the physician the right to refuse to consent to any settlement. This is unlike traditional liability insurance coverage, where the insured may be given the opportunity to voice an opinion on settlement but rarely has any power to block a settlement within policy limits.

SVMIC continues to enjoy wonderful profitability, even as the number of physicians it insures declines.

SVMIC – State Volunteer Mutual Insurance Company – is a physician-owned insurance company that was created over 30 years ago. It has grown from a company with paid-in capital of $7,500,000 to a entity with a policyholder surplus (think: net worth) of $251,321,321.

Let me explain what that means. Policyholder surplus is determined by subtracting reserves for claims payments and claims expenses from assets. Each time a claim is made a reserve is set. The size of the reserve is based on the severity of the claim, the likelihood of payment and the anticipated defense costs. The amount reserved on a claim changes over time, but the idea is that the sum total of reserves should pay all existing claims and all future defense costs. There is also a category of reserves known as IBNR – Incurred But Not Reported. This is for claims that the company "knows" to be out there but have not yet been reported to the company.

Articles Tagged with SVMIC

SVMIC – 2008 Financial Results – Part 1