State's Only Med-Mal Firm Built From Scratch

by Luke Jones  on Monday, Oct. 22, 2012 12:00 am  

Corey Little, front, started Arkansas Mutual Insurance Co. in 2007. Investors like Tom Robinson, rear, helped provide the $2.5 million needed to start the state?s only med-mal mutual from scratch. (Photo by Michael Pirnique) (Photo by Michael Pirnique)

When Arkansas Mutual Insurance Co. was formed in 2007, Arkansas became the last state in the union to get its own medical malpractice insurance company.

After St. Paul Cos. of Minnesota, the largest carrier of medical liability policies, abandoned the med-mal business entirely in 2001, about 2,300 of Arkansas doctors lost their liability insurance coverage. In many states, medical societies formed local mutual insurance companies to fill the hole. But Arkansas took a different path.

"In years past, the medical society had considered creating a mutual insurance company," said David Wroten, executive director of the Arkansas Medical Society. "But it was always determined not to have a large enough market in the state. Then you add the fact that we've always had carriers, and most of those carriers, at least right now, are mutual companies."

Other out-of-state carriers, like State Volunteer Mutual Insurance Co. of Brentwood, Tenn., and Mag Mutual Insurance Co. of Atlanta, swept in to replace St. Paul.

So Arkansas had no med-mal carrier to call its own until 2007. Corey Little, a pharmacist, wanted to create in-state competition for the out-of-state liability insurers that Arkansas doctors used. But it wasn't easy to get the ball rolling. To begin with, he needed $2.5 million in capital. Most other med-mal mutuals were built by state medical societies, a foundation Little didn't have. Moreover, he couldn't start an insurance company with debt.

"So we did research, and found out that most [mutual liability companies] are formed through this structure of a management company," he said.

Little founded Arkansas Professional Management, and when enough money was invested in that company, it borrowed the money to form the not-for-profit Arkansas Mutual.

"That company loaned Arkansas Mutual $2.5 million that [the Arkansas Insurance Department] said has to be in the bank with no liability before we issue the first policy," Little said.

Dr. Tom Robinson of Little Rock, one of the company's founders and investors, said he supported Arkansas Mutual early on because he wanted an in-state competitor.

Out-of-state carriers "cost me, and every doctor in the state of Arkansas, a lot of money, plus money going out of state," he said. "It's not what was best for the doctors in the state.

"I never in my practice got sued, but my rates kept going up. I couldn't understand that either. We had no voice, no say-so. We were just renting a policy."

When Robinson heard what Little was doing, he joined right away. Now Robinson, an emergency physician, is the company's director of physician relations.




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