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)

Others, he said, don't want to change carriers, even if their premiums have risen. In the beginning, Little said, potential clients would often tell Little to come back when the mutual was five or 10 years old.

"Our biggest challenge we faced was the calendar," Little said. "I couldn't argue - and don't argue - with doctors that say they wanted us to be around a while."

"There was one case that, to me, epitomized our futility and frustration," Robinson said. It happened when the mutual gave a quote to a large primary care group in the state. Staying with its current carrier, Robinson said, would cost the group about $2,000 more per year.

"Each one of their doctors had been overcharged for 10-15 years that amount of money," he said. "We pointed that out, gave them a true quote. But they elected to stay with their original carrier."

Many doctors still would prefer to put their money with a larger, more established company than a small, young mutual, Little said.

The Arkansas Insurance Department shows Arkansas Mutual's estimated premium for clinic physicians at around $6,637, about $1,000 more than the three most-used carriers, but Little said credits are typically available to offset that rate.

"Given our experience in the market, our prices are competitive," Little said. "We are frequently the least expensive option for Arkansas physicians purchasing medical professional liability insurance coverage."

The insurance department did report that Arkansas Mutual's overall rates dropped 12.5 percent between 2010 and 2011, a steeper drop than any of the competing carriers.

It also reported that Arkansas Mutual earned $730,580 in net premiums last year, compared with $306,779 in 2010.

Arkansas Mutual works like a cooperative: Excess cash, rather than being used as a profit, is redistributed among policy holders as a dividend.

"Basically, doctors are paying a deposit into their own company, and we pay out claims and overhead," Little said. "Those are the only two things premium dollars go for. With all these out-of-state companies, they're here for one reason, and that's profit."

Little said his company caters better to its doctors needs because its employees aren't pressured to make profits. Also, it can pick and choose its clients.



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