Doctor takes over at W.Va. Mutual Insurance Co.

By Staff reports | Jan 26, 2012

CHARLESTON – West Virginia Mutual Insurance Company is entering a new phase of its operations with a change in leadership. The company also has received a high rating for its financial strength.

R. Austin Wallace, M.D., has taken over as president and chief executive officer from David Rader, who had led the company since its inception in 2004 as a physician-run malpractice insurer owned by its policyholders. Wallace has served on the Mutual's board of directors from its beginning, first as vice chairman from 2004 to 2009 and as its chairman from 2009 to the present.

"It is an honor for me to take this position as the head of this company that has done so much to stabilize the malpractice insurance market in West Virginia," Wallace said. "A decade ago, West Virginia was the worst state for malpractice insurance, and physicians were leaving the state. But now, West Virginia is attracting physicians, and the Mutual has played a key role in that turnaround."

It is not unusual for a physician like Wallace to take charge of such a mutual insurance company that is owned by the physicians it serves. The Mutual always was meant to be run by physicians, and this is just the next phase in that development. Rader was recruited to serve as the company's initial leader because of his insurance industry experience, especially with start-up medical liability companies in several states.

The Legislature helped create the West Virginia Mutual as part of a 2003 package of medical liability reforms. The company took over coverage of about 1,400 physicians from the state-run Board of Risk and Insurance Management, which used as a stopgap means of covering physicians after a few big commercial insurance companies decided to pull out of malpractice coverage in the state.

The most recent testament to the West Virginia Mutual's success has come in the latest ratings from A.M. Best Co., the world's oldest and most authoritative insurance rating and information source. A.M. Best assigned a financial strength rating of A- "Excellent" with a "stable" outlook.

"The ratings reflect West Virginia Mutual Insurance Company's excellent capitalization, profitable underwriting and overall operating performance, as well as its strong market position in West Virginia as the leading writer of medical professional liability insurance to physicians in the state," A.M. Best said in a written statement. It further cited the Mutual's strict underwriting discipline, conservative loss reserve position and knowledge of West Virginia, and said, "The company's profitability also is a by-product of the state's favorable tort reform environment."

The Mutual received a $24 million state loan to get it started in 2004, but its strong financial performance allowed the company to pay that loan off 25 years early. Premium rates for physicians vary depending on specialty, but they generally are 40 percent to 50 percent lower than they were in 2004. The company currently insures about 1,450 physicians and provides them with continuing education through more than 50 seminars and more than 250 office visits each year.

"This company is a partnership between its physician-owners and the health care delivery system," Wallace said. "Our mission is to improve public health in West Virginia by providing affordable malpractice insurance, thereby keeping doctors in the state, and by encouraging the best practices among physicians through our robust risk management program. We continue to look for more ways to improve what we do. Doctors need to concentrate on their patients, not on whether their insurance company will stay around, as was the case a decade ago."

Leading the Mutual will be his main responsibility, but Wallace, who is an otolaryngologist, will continue to serve as a practicing physician on a limited, part-time basis.

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