Medical malpractice payouts have fallen 10% at the state’s largest physician insurer, but executives don’t appear ready to cut doctors’ insurance premiums yet.

ISMIE Mutual Insurance Co. paid out $150.4 million to cover medical malpractice claims in 2004, down 10% from 2003. Premiums charged to doctors exceeded that payout by $270.1 million, the insurer’s March 1 annual filing with the Illinois Department of Insurance shows. The surplus set aside to cover unexpected losses also grew 5.3% to $212.5 million.

CEO Alexander Lerner’s 2004 compensation rose to $947,793, up 6.7% from 2003. […]

The hike in premiums and the dip in claims have bolstered ISMIE’s finances. The insurer in 2004 took in $411.4 million in premiums, recorded $40.7 million in investment income and set aside $266.3 million against future claims. ISMIE reported a total bottom-line profit of $11.7 million in 2004. That’s down 41% from 2003, when the insurer posted a profit of $19.8 million on premiums of $341.8 million.

Meanwhile, ISMIE’s chief executive, Mr. Lerner, got an $80,000 bonus in 2004, bringing his total compensation to $947,793, according to insurance department filings.

Mr. Lerner’s 2003 compensation was more than twice that of R. Kevin Clinton, president and CEO of Michigan-based American Physicians Capital Inc., a malpractice insurer of similar size.

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