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Medical Malpractice Insurance: A Mutual versus Stock Insurance Companies

By: Willam D. Dyer

When considering which insurer to chose for your medical malpractice insurance. Besides checking at www.ambest.com and confirm that the insurer is rated “A” or better (if not pass on the deal) you also might consider if they are a Mutual Medical Malpractice insurer or Stock Medical Malpractice insurer.

Stock Medical Malpractice Insurers are public companies, and they answer to the stockholders who often are not the policyholders, but are pure investors. The advantage to these companies is they can raise capital from the markets, and they can be (but not always) priced better than a mutual since they may assume more risk, due their capital position. The biggest Stock Medical Malpractice , in terms of assets, and the oldest in the country is Medical Malpractice insurer is Medical Protective. They are part of Berkshire Hathaway which has over 200 billion in capitalization. The downside of a Stock Medical Malpractice insurer is if they over charge for their premiums you, the policyholder do not get a refund or dividend; the profits go to those who bought Berkshire Hathaway’s stock.

Mutual Malpractice Insurers are insurance companies where the policyholders are the owners or stockholders in a sense. This means that the policyholders can vote as to who is on the board, and they also will receive a dividend, or excess profits as refund of premium. This means if the insurer has collected more premium than it needs they return it to those who paid it, the policyholders. The advantage of these types of insurers is they are not geared toward profit for outside investors, but to perpetuate the future of the insurer and operate it at the lowest cost possible. The downside is they will often not be the cheapest, since they tend to minimize risk as much as possible with big reserves, and can be very conservative.


California’s only Mutual Medical Malpractice insurer is NORCAL Mutual. They have just declared a dividend as they have in 31 of its 33 years in business. This year it will be 10%, so if you paid them 30k in premium you will receive a credit of 3k on your upcoming 2011 renewal.

Below are the particulars for our NORCAL clients who will be receiving this dividend, here is NORCAL’s dividend announcement.

NORCAL Mutual has declared a dividend for eligible physician, medical group and healthcare facility policyholders. The 2011 declared dividend for California policyholders equates to approximately 10 percent of your 2010 premium — the same level as last year. The dividend will be returned in the form of a premium credit beginning with your 2011 renewal statement.

With the 2011 dividend, we have declared a dividend in 31 of the past 33 years. Over our 35-year history, we have declared more than $400 million in dividends. As a mutual company that answers to you and your fellow policyholders, we take great pleasure in the responsible return of revenue.

How Much Is Each Policyholder’s Share of the Dividend?

Your share of the dividend equates to approximately 10 percent of your prior policy-year premium.

How Do I Know Who Is Eligible for the Dividend?

Eligibility for the 2011 dividend is based on the following criteria:

• Being actively insured and in good standing with NORCAL Mutual on September 30, 2010. (The dividend amount is based on the premium written for each eligible policyholder on policies with effective dates beginning on or after October 1, 2009 through September 30, 2010.)

• Renewal of the NORCAL Mutual policy for 2011
Eligible risks: a physician, a physician group or a healthcare facility (excluding most emergency rooms) written on NORCAL Mutual’s Individual/Entity, Facility, or Group Policy Forms. ER groups written on the IE Form are eligible for the dividend.

Please note that the 2011 dividend will be paid only to those policyholders who meet all of the criteria listed above.

How Will The Dividend be Applied?

The dividend will be applied as a premium credit to each billing statement, for one year, for policies renewing on or after January 1, 2011.

If premium is paid in quarterly installments, your dividend credit will be applied to your quarterly billing statements. Each quarterly dividend credit will equate to approximately 25 percent of your total share of the dividend.

HCP National is a California Malpractice Insurance Broker whose home office is in Orange County. We are also NORCAL Medical Malpractice and Medical Protective Insurance Brokers.

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Diverse Team of
Insurance Experts

HCP National is a certified MBE & WBENC Insurance Brokerage.
Request a quote now and see how much you can save!