Illinois Medical Malpractice Insurance
Illinois Medical Malpractice Insurance Market Summary
Medical malpractice insurance claims in Illinois historically have followed a cyclical pattern, which is true in most states and nationally as well. Typically when the economy takes a downward turn the number of medical malpractice claims increases along with the severity of settlements and awards. Because the malpractice claims have been cyclical it follows that the medical malpractice insurance market and rates are also cyclical and directly related. In Illinois we have seen years where malpractice claims were so frequent and payments were so severe that insurance companies were losing money. Naturally that created a climate where insurance companies no longer wanted to insure doctors in the state, and the ones that would raised their rates to compensate for the amount of money they were paying out for claims. This is what’s referred to as a “Hard Market” – premiums are high, claims are up, there are only a few medical malpractice insurance companies available and physicians have a hard time finding coverage.
The Hard Market creates challenges for healthcare providers. When there are only a few companies offering coverage they tend to make underwriting guidelines more stringent. Not too long ago, an Illinois physician with one claim would be denied coverage in the standard insurance market forcing him to find coverage elsewhere at exorbitant prices. Physicians with claims in Cook, Madison, McHenry, St. Clair, and Will Counties often couldn’t find coverage at all. During these severe Hard Markets, the cost of malpractice insurance in some areas in Illinois caused physicians to move locations, sometimes going across the state line (into Missouri and Indiana) to practice, to stop doing higher risk procedures, and even to close up shop and stop practicing medicine permanently.
The current medical malpractice insurance situation in Illinois, however, is just the opposite. The state is in the midst of an unprecedented long-running “Soft Market” that has created a favorable climate for physicians and other healthcare providers. In the Soft Market, frequency and severity of claims is down and remains stable. Because medical malpractice insurance companies are not getting hit with as many claims and the payouts are lower they are more profitable. That’s where we are right now. It seems the downturn in the economy that began in 2009 has not affected the number of malpractice claims during this current cycle. There are more malpractice insurance companies offering coverage in Illinois than we’ve seen in decades. The companies have been lowering rates for the past 5 years and they still remain profitable. Underwriting guidelines have loosened up a great deal in the last few years as well, making it relatively easy for physicians to find coverage at a reasonable rate in almost every county in the state.
Medical Malpractice Coverage in Illinois
The Current Climate
The current situation is surprising to industry experts. As mentioned earlier, Illinois is in one of the longest running Soft Markets . Even with the economy down and tort reform overturned, the number of claims is down and the severity of payments has remained lower.
Most Illinois malpractice insurance leaders report that rates are at an all-time low and there are more options for coverage with A rated carriers than we’ve seen in a long time. While there are still some areas that have higher rates, such as Cook County, Madison County, and St. Clair County, the rates are a fraction of what they were a decade ago. For example, an internal medicine physician in Cook County can get coverage for around $35,000 per year in contrast to anywhere between $60,000 and $80,000 in 2003. An OB/GYN in Madison County who would have paid as much as $200,000 10 years ago, if he could get coverage at all, is now paying less than half that amount and has many options to choose from today.
Insurance companies are fighting for business in Illinois right now and that competition has continued to push rates down. ISMIE has the largest percentage of market share as it insures more than 50% of all IL physicians. Chicago’s business magazine, Crain’s, reported in an article dated June 22, 2013 that while premiums have gone down for the last 5 years, ISMIE hasn’t seen a loss since 2002 and its profits continue to grow. As a mutual company owned by policyholders, in 2012 ISMIE’s 12,000 physicians received a dividend of $17 million and it has committed to giving back another $45 million in 2013. Crain’s reported a record setting profit for ISMIE in 2012 of $57 million – after dividends were paid. Profits are up for the other medical malpractice insurance companies, as well.
In addition to ISMIE, profits are up at most of the other medical malpractice insurance carriers offering coverage in Illinois: The Doctors Company, ProAssurance, MedPro, Medicus, PSIC, Capson, and Oceanus among others.
While risks of medical malpractice claims are not forefront on the minds of physicians right now in Illinois, most are concerned about the implications of the Affordable Care Act and the constant changes and unknowns of practicing medicine in IL. There are new regulations related to Medicare and Medicaid, as well as HIPAA rules rolled out in 2013, reimbursements are lower, and physicians are working harder for less reward. For this reason we are seeing many physicians accept offers to sell out of private practice and go to work for hospitals. This is a trend that is typically cyclical and many physicians eventually return to private practice, but industry experts think this time it may be different due to the permanent changes the ACA will have on delivery of healthcare.
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Illinois Medical Liability Insurance Carrier & Availability Summary
Illinois is a market that is dominated by the state’s largest carrier ISMIE, which represents over 60 percent of the medical malpractice insurance market with the top 25 carriers representing nearly 99 percent of the available medical malpractice insurance market. Leading into the year 2010 the number of carriers offering coverage increase significantly with rates being as low as the have been for nearly a decade. To date, even with the overturning of the Illinois tort reform, carriers are still competing for business in Illinois and there have been no rate increases as a result.
Obviously compared to the country as a whole, the rates in Illinois are high, especially in Cook and collar counties as well as Madison and Saint Clair counties, but overall as a market rates have been stable. Recently, the state’s second largest carrier, American Physicians Insurance Company (APIC) was purchased by the nation’s largest carrier, The Doctor’s Company. Availability is currently not an issue in Illinois, but as always affordability is the issue.
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