MagMutual First to Allocate Millions for Loyal Policyholders - Insurer sets precedent in call for greater industry financial transparency
April 23, 2015
ATLANTA (April 23, 2015) – MagMutual Insurance Company, the Southeast’s largest medical professional liability insurer, announced today it will set aside the full value of its obligation for the Owners Circle® loyalty program. By voluntarily specifying these funds on financial statements, MagMutual becomes the first medical liability insurer to allocate funds for loyal policyholder-owners while calling for greater transparency across the industry.
Since 2012, MagMutual has declared $200 Million in loyalty funds beyond dividends, including $50 Million this month. CEO Dr. Joseph Wilson said the company can do this without impacting financial status and ability to pay claims. MagMutual reported 2015 financials including total admitted assets of more than $1.6 Billion, with over $773 Million in surplus – the strongest in its 33-year history.
Starting with the next quarterly statement filed, balance sheets will reflect a line item for Owners Circle® segregated surplus.
“We’re the only company in the industry to voluntarily set aside these monies because we intend to honor our promise to policyholders,” said Wilson. “If your insurer has not specifically earmarked loyalty funds, then you should be asking why.”
Each year, MagMutual’s physician-led board of directors considers whether and how much the company will allocate to the Owners Circle®. Credits to each policyholder’s account are calculated based on the expiring premium for each eligible named insured physician. MagMutual makes account distributions after an insured physician retires from practice (after age 50), or becomes fully disabled or dies. Policyholders are automatically enrolled in the program after the first year of medical liability insurance coverage.
“What’s promised in return for your loyalty is reflected on our financials” said Neil Morrell, president of MagMutual. “This is another example of the benefits of being with a mutual insurer that gives value to policyholders as opposed to a stock insurer concerned with shareholder value.”
Morrell said the industry is in danger of pledging more money than it has because NAIC accounting rules potentially allow insurers to understate the full liability of loyalty program declarations.
Founded in 1982, Atlanta-based MagMutual is a leading provider of medical professional liability insurance and practice-improving patient safety resources for physicians and hospitals. It is the fourth largest policyholder owned and led mutual insurer in the country. The company is rated A (Excellent) by A.M. Best. Insurance products and services are issued and underwritten by MAG Mutual Insurance Company and its affiliates. For more information, visit www.MagMutual.com
Ed Lynch, senior vice president, business development, MagMutual