CEO says change will help company grow through new partnerships and investments
MINNEAPOLIS--(BUSINESS WIRE)-- Medical liability insurer MMIC Group, Inc. (MMIC) has received final regulatory approval to change from a stock holding company to a mutual insurance holding company, “a step that will enhance our ability to succeed in a challenging marketplace by making new investments and partnering with other firms,” MMIC President and Chief Executive Officer Bill McDonough announced today.
“Although we were previously a stock holding company, we have operated like a mutual for many years, consistently paying dividends to all customers,” McDonough said. “The change in governance, therefore, gives us a corporate structure that accurately reflects who we are.
“This will also enhance our ability to affiliate with other mutual firms owned by physicians, hospitals or other providers, giving us the scale to compete effectively at a time of increasing cost pressures on mutual medical liability insurers,” he added.
Minneapolis-based MMIC earlier received approval for the change from its physician policyholders and shareholders. That was followed by final approval from the Minnesota Department of Commerce late last week.
Allying with other physician-owned insurers
McDonough explained that the change will make it easier for MMIC to share such “back office” costs as technology, investments, reinsurance, and actuarial services with other firms. It also, he said, will enable MMIC to make investments in new products and services to meet the demands of the changing health care industry.
“Increasing consolidation among health care providers is driving premiums down and resulting in higher expense ratios for many medical professional liability insurers,” McDonough said. “At the same time, the large national medical liability insurers are overcapitalized, given the results of the last five or six years, and are looking at possible acquisitions as a way to deploy that capital.
“This environment is squeezing many other mutual medical liability insurers, perhaps the most serious economic threat to these firms since they were formed out of the medical liability insurance crisis of the 1980s,” McDonough added. “By investing, affiliating and reducing these pressures, we can help ensure that health care providers continue to have access to affordable medical liability insurance and services.”
Economies of scale and added advantages
“We were very eager to change to the mutual insurance company structure, committed to our roots to remain a physician-controlled, independent firm while expanding ownership to all policyholders,” said Mark Odland, M.D., MMIC chairman of the board. “Under our new structure, we believe we can partner with other provider-owned medical liability insurance companies, helping companies to continue to operate in their markets while providing affordable medical liability insurance.”
McDonough explained that MMIC has the “economies of scale and breadth of products and services” needed to affiliate with other mutual insurers. “Most mutual medical liability firms insure only physicians, but we also insure hospitals and other providers and facilities. In addition, we provide health information technology services through our subsidiary MMIC Health IT, and have made significant investments in predictive modeling and data warehousing.
“These offerings, and our broader book of business, have enabled us to drive costs down, and can help other mutual insurers do the same,” he said.
About MMIC Group, Inc.
MMIC Group, Inc. provides professional liability insurance and health information technology services to physicians, clinics, hospitals and other health care facilities and systems, primarily in Minnesota, Iowa, Nebraska, Kansas, Missouri, North Dakota, South Dakota and Wisconsin.
Founded in 1980, MMIC currently insures more than 14,000 health care providers and 375 hospitals and health care facilities. In July A.M. Best Company ranked it as the 20th largest medical professional liability insurer in the United States.
MMIC Group, Inc.
Julie Stafford, 1-800-328-5532, ext. 6802
KEYWORDS: United States North America Minnesota
INDUSTRY KEYWORDS: Practice Management Health Hospitals Professional Services Insurance