News

What You Should Know about Rates and Dividends

The Board of Directors is pleased to announce a 25% dividend for all physician insureds in the form of a 2015 renewal premium credit and continuation of 2014 rates through your 2015 policy year. Issuance of the dividend requires that an active 2014 professional liability policy be renewed and maintained throughout the 2015 policy period. Mid-term cancellation would result in a pro-rata dividend.

Dividends appear on your policy invoice as a credit to either your annual or quarterly billing installment. OMIC issues dividends as a credit toward renewal premiums for two reasons. First, premium credits offer favorable tax implications for policyholders. Second, premium credits allow for easy and efficient distribution of dividends.

Each year OMIC’s Board receives a report from actuaries describing current claims trends and how they relate to rate levels for each state and territory. Using this information, we determine whether a rate increase or decrease for the current or upcoming year is warranted. Dividends, on the other hand, are generally determined on the basis of whether claims trends for past years are better (or worse) than expected. Because malpractice claims have a “long tail,” in which resolution often occurs several years after the incident is reported, trends are only evident after careful monitoring of claims over a significant period of time.

OMIC continues to reduce malpractice insurance costs through lower rates and paid dividends. In addition to average premium reductions of nearly 30% nationally since 2005, OMIC has announced dividend credits totaling more than $58 million since our company’s inception, outperforming our peer companies by a significant margin. Issuance of dividend credits is not guaranteed and is determined each year after careful analysis of our operating performance. OMIC’s philosophy is to return any premium above which is necessary to prudently operate the company and to do so at the earliest opportunity.