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2014 Dividend Questions Answered
In 2014, the Board of Directors of the Ophthalmic Mutual Insurance Company (OMIC) announced a 25% dividend for physician insureds that will come in the form of a 2015 renewal premium credit. See below for details about distribution of the dividend credit.
Q: When will I receive my 2014 dividend?
A: OMIC announced a 25% dividend for physician insureds renewing in 2015. Issuance of this dividend requires that an active 2014 professional liability policy be renewed and maintained throughout a physician insured’s 2015 policy period.
Q: What happens if I cancel during the year?
A: Mid-term cancellation will result in a pro-rata dividend.
Q: How will I receive my dividend?
A: The dividend will 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.
Q: How does OMIC decide whether to implement a rate decrease as opposed to a declared dividend?
A: Each year OMIC’s Board of Directors receives a report from our 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 year is warranted. Dividends are generally determined after past years have developed in such a way that was better or worse than expected. OMIC’s philosophy is to return any premium above which is necessary to prudently operate the company. Because malpractice claims have a “long tail”, in other words it often takes several years for them to be resolved, trends are only evident after careful and prudent monitoring of aging claims.
OMIC continues to reduce malpractice insurance costs through lower rates and paid dividends. In addition to premium reductions of nearly 30% across the country since 2005, OMIC has announced dividend credits totaling more than $58 Million since our company’s inception. Issuance of dividend credits are not guaranteed and are determined each year after careful analysis of OMIC’s operating performance. OMIC’s Board is committed to returning any premium above what is necessary to prudently operate your company.
