January 2026
From Vinyl to Virtual: Our 50^th Year

Rekindle our commitment

The crisis which we all foresaw in 1975 when Mutual Assurance was conceived, is upon us today! Alarming increases in the frequency and severity of claims and lawsuits filed during the past year made reinsurance mandatory, and, though expensive, we were able to acquire it in December, 1979.

But the problem before us, and the one which must be stressed, is the impact of claims on the continued financial viability of the company.

…

Most importantly, the decline in underwriting profit for 1979, as illustrated in the Statutory Financial Statements, is directly attributable to the increased number of claims and lawsuits, and provisions for increasing our reserves for claim losses. During the last eight months of 1979, there was a three-fold increase in the number of malpractice lawsuits in which our insureds are defendants. The number of claims likely to become lawsuits adds another 300 to our file.

There should be no doubt in any Alabama physician's mind as to the reality of the present crisis, but rather, “how do we respond to it, and when do we begin?”

I suggest we begin today to rekindle the commitment we all had several years ago when the company was formed. Otherwise, we face two choices:

• A spiraling round of ever-increasing malpractice premiums, or
• The ultimate failure of the company—both financially and symbolically.

Mutual Assurance, acting alone, can do very little to affect malpractice claims frequency or severity. We only defend them. And quite frankly, we can control only 6% of the premium dollar. The remaining 94%, related directly or indirectly to claims, is under your control.

As you expect Mutual Assurance to perform and to retain the financial viability it has achieved, each and every other insured has a right to expect all members in this Society to be responsible. Mutual Assurance is nothing more than an institution, representing, collectively, the individual efforts of its owners. If we do not, individually, heed the perilous signals all around us, make no mistake about it, Mutual Assurance cannot save us collectively.

My belief is that an overwhelming number of Alabama physicians do not wish this company to fail, nor do they look forward to ever increasing malpractice premium costs.

Here is what we must do to avoid them:

• Channel as much of your other insurance business as practical through Mutual Assurance Agency. Commissions earned by that wholly owned subsidiary add directly to the financial strength of the Society, with no underwriting risk to it. Ultimately, that stability greatly enhances our ability to resist the malpractice claims we now encounter.
• Join with the other professions in the state who are working for legislative reform of our current Tort Law.
• As physicians, practice good medicine. Attend and take part in one of the various risk management programs which Mutual Assurance participates in sponsoring.

To the extent that we are not collectively successful in these kinds of efforts, you should expect, if we are to maintain this company as a sound provider of professional liability insurance, ever-increasing professional liability premiums. We cannot ask, nor should you expect, independent actuaries to ignore the reality of the Alabama experience. Currently, one in nine of our insureds is facing a claim or suit. As recently as ten years ago, that ratio was one in fifty. Ten years ago we were ranked far below the national average in such ratios. Today, we are above that average.

I assure you that we will continue to do everything possible to avoid claims increases. We will continue to analyze each and every claim as professionally as we know how. The years ahead are likely to be difficult; with your commitment and your cooperation, we can successfully confront the obstacles before us. Finally, I'd like to thank the Board of Directors and the management staff for their efforts and continued dedication.

The second major chapter of ProAssurance’s rise to prominence is, at its beginning, a story of two companies on parallel paths: Mutual Assurance, based in Alabama, and Physicians Insurance Company of Michigan. Each shared a similar overarching philosophy, yet each brought distinctive strengths to the table.

The road each took to form ProAssurance is a story that informs the DNA of ProAssurance to this day.

Mutual Assurance, led by visionaries such as founding President A. Derrill Crowe, MD, and Executive Vice President Paul Butrus, clearly understood that a larger and more financially stable company would be required to meet the challenges of a changing healthcare delivery system.

Hospital/physician partnerships, specialty-specific practices consolidating and expanding across state borders—all demanded new capabilities and additional capital to ensure long-term financial stability and maintain top-tier ratings from agencies such as AM Best.

Crowe recalled, “Mutual Assurance was doing well, but it became clear that capital was going to be king, and we would have to raise it somehow. I also wanted the company to go public so policyholders and employees could own part of what we had built. And I began to see that there would likely be opportunities to acquire some of the single-state companies, because some were beginning to experience financial problems from charging inadequate premiums and paying too much too often to settle claims.”

The solution was demutualization—converting the company from a policyholder-founded and -owned company to a publicly traded stock company, albeit with most of the shares held by insureds. Internal discussions that began in the mid-1980s gained momentum following consultations with financial advisors and the support of the Board of Directors.

The full-scale push to demutualize began in earnest in late 1989. The process required educating policyholders about the need for additional capital, the inefficiency and burden of raising that capital through higher premiums, and the opportunity for them to profit from the strong company they helped build and support over the years.

Mutual Assurance successfully navigated both the politics of organized medicine in Alabama and the complexities of the demutualization process. In simple terms, each policyholder was entitled to a prorated share of the company’s net worth, based on the percentage of total premiums paid between 1987 and 1989.

Policyholders had the option to take the money due them in cash—which was immediately taxable—or in stock, which could allow them to defer taxes and share in the further success of the Company. An overwhelming majority took stock, but the success of the process depended on maintaining a level of cash that would maintain the strength and stability of the company in the eye of regulators and rating agencies.

Additional shares were offered to policyholders at $10 per share, and many chose to purchase more. Those additional share purchases, along with a limited number of shares sold to institutional investors, satisfied regulatory requirements.

Following an overwhelming policyholder vote in favor on March 15, 1991, Mutual Assurance entered the final stage of the demutualization, becoming the first property casualty insurer in decades to convert to a public company.

Mutual Assurance shares were listed on the NASDAQ exchange on September 11, 1991, under the symbol MAIC. While Mutual Assurance was the first of the so-called “bedpan mutuals” to convert to a stock company, it was not the first physician-founded stock company. That distinction belongs to Physicians Insurance Company of Michigan (PICOM), which also had its roots in the same medical malpractice crisis that birthed Mutual Assurance and numerous other physician-founded insurers. PICOM’s path to becoming a stock company, however, was somewhat different.

During the crisis that spurred these companies’ formation, Michigan was a state of essentially two medical communities: physicians (primarily surgeons) in and around Detroit, and physicians practicing outside the Detroit metropolitan area.

Vic Adamo, who would later become President of PICOM, says plaintiff lawyers largely accounted for the bifurcation, “The medical malpractice crisis in Michigan was felt primarily by Detroit-area surgeons,” he said. “They were the primary targets of the Detroit area plaintiff’s bar, which was more focused on malpractice lawsuits, and was probably more sophisticated at the time.”

Meanwhile, organized medicine—led by the Michigan State Medical Society—was exploring the formation of an MPL insurer. “At that time, the medical society was more focused on non-Detroit physicians—non-surgeons and general practitioners,” Adamo noted.

With the mid 1970's crisis biting harder, Detroit surgeons Arthur Eisenbrey, MD, and Harvey Gass, MD, approached Jack Dodge, an attorney well connected in medical and political circles, for assistance. In Eisenbrey’s case, two malpractice claims against him resulted in a 300 percent increase in his premiums. When the Michigan Insurance Bureau refused to allow the increase, Eisenbrey’s insurer pulled out of Michigan.

The trio came together to form what would eventually be known as the Physicians Crisis Committee. That group began the organizing, fundraising, and lobbying efforts typically handled in other states by the medical societies. By 1975, all but one commercial insurer had exited Michigan.

The Committee leveraged the surgeons’ medical community connections and Dodge’s influence at the statehouse to push through a series of bills that dealt with tort reform, largely limitations on plaintiff's lawyers’ fees, and the creation of a state-backed insurance vehicle, the Brown-McNeely Fund, named after Basil Brown and William McNeely, the two sponsoring legislators.

Adamo describes the Fund’s purpose, “It insured most of the Detroit area surgeons, and also the foreign medical grads in Michigan, who couldn't get insurance because most were practicing where there was a limited private market or no market at all. The Fund wrote the same level of coverage that was available in the private market.”

The medical-legal environment in Michigan gradually improved through incremental reforms, including rate-setting for high-risk specialties—such as surgery, anesthesiology, and obstetrics—based on actual loss experience rather than assumed loss data.

Although the malpractice crisis had not ended, it abated enough that the state of Michigan decided it wanted out of the malpractice insurance business. In 1979, the state put the business of the Brown-McNeely Fund up for bid. The Physicians Crisis Committee secured the financial backing of Physicians Insurance Company of Ohio (PICO) for their bid and were successful.

Much like Mutual Assurance’s demutualization, there was a formula by which insureds were granted stock based on premiums paid, but there was no option to take cash. However, any profits from the emerging company would go to physicians who had paid premiums.

Thus, on June 27, 1980, Physicians Insurance Company of Michigan commenced operations—structured as a stock company from inception. Adamo, who practiced law with Jack Dodge and had been heavily involved in the Fund’s evolution, eventually became PICOM’s president. He says of the early days, “Although we were a stock company, there was no real trading in the stock for five or six years. It was only after physician stockholders began to want the ability to sell shares that we moved to the Pink Sheets and later to the NASDAQ in 1993 listed under the symbol PICM.”

With both Mutual Assurance and PICOM public, both focused on building financial strength and both eyed limited de novo expansion into neighboring states. Each successfully walked the fine line of maintaining policyholder involvement while meeting, and often exceeding, the expectations of investors that were largely mutual funds that embraced the longer-term horizon required to be a shareholder in an insurer in a long-tail business such as MPL.

Mutual Assurance was the first of the two companies to execute an expansion move through a business transaction. On January 1, 1994, Mutual Assurance acquired the West Virginia Hospital Insurance Company and shortly thereafter became the endorsed medical liability carrier of the West Virginia Medical Society. The combined transactions added dozens of hospitals and more than 1,400 physicians to the company’s policyholder base.

Later that year, PICOM agreed to renew policies from Associated Physicians Insurance Company, an Illinois insurer with more than 2,200 insureds. The renewals began on January 1, 1995.

1995 was also the year that Mutual Assurance made significant inroads into the Midwest. First, the company acquired 52 percent of the stock in Physicians Insurance Company of Indiana (PICI) and later that year acquired the remainder of PICI’s outstanding shares.

Then in July 1995, Mutual Assurance assumed the business of Physicians Insurance Company of Ohio (PICO). This transaction helped cement the foundation for Mutual Assurance’s future transactions in the region as PICO was seen as a leader, having been a co-founder of PICOM, and the founder of PICI and Physicians Insurance Company of Wisconsin (PICWIS).

Mutual Assurance, recognizing that having “Mutual” in its name could be confusing to insureds, distribution partners, and regulators, changed its name to MAIC Holdings, Inc., on August 31, 1995. That would be followed in 1997 by a further renaming to Medical Assurance, Inc., and a move to the New York Stock Exchange, trading under the symbol MAI.

PICOM also continued to grow. In 1996, it assumed the business of American Medical Insurance Exchange, which insured approximately 900 physicians and dentists in Indiana but lacked the size and strength to expand independently.

The next big move was PICOM’s, in July 1998, when it merged with Florida-based Physicians Protective Trust Fund (PPTF). At the time, PPTF insured nearly 6,000 practitioners and 500 medical groups. The merger doubled PICOM’s size, adding $430 million in assets and $60 million in premiums while helping diversify PICOM’s insured base. Reflecting the significance of the transaction, PICOM changed its name to ProNational Insurance Company.

That same year, Medical Assurance expanded westward for the first time by acquiring Missouri Medical Insurance Company, another publicly traded MPL insurer. In 1999, it further strengthened its Missouri presence by assuming the ongoing business of Medical Defense Associates.

Around this time, Crowe recalls that he began considering other big steps. One of many conversations about consolidation and expansion led to discussions with Adamo at industry meetings. “I’d been talking with Vic on and off for three or four years,” Crowe recalled. “Eventually we agreed to talk seriously, and I went up to speak with their Board.”

Adamo noted that ProNational’s Board had been looking at strategic options as early as 1996, “Our Board went through an extensive strategic planning exercise, and I gather it was similar to what Medical Assurance did, and we came to the conclusion we had to be a bigger company. Also, the Florida transaction became half our book and we needed a broader spread of risk. So, that was a big motivation at our end, because we needed more non-Florida business to balance out Florida.”

Crowe says it all made sense strategically and monetarily. Adamo agrees, “If you looked at the map, both companies had grown into large regional companies but with overlapping footprints. Ohio, in our backyard, was Mutual Assurance’s second largest state, and Florida, in Medical Assurance’s backyard, was our second largest state. So when we laid out the map, the fit was obvious.”

The merger was completed on June 27, 2001, and was by far the largest transaction of its kind in the MPL space and made the new company, now named ProAssurance, the third largest MPL insurer in the country.

Synergies emerged immediately. Both leaders recall that each company brought strengths to the table, and both men agree they each had qualities that made them a successful pair.

“Vic had skills and expertise I didn’t—especially in personnel and process,” Crowe said. “And I brought attitudes and convictions that he didn't have.”

Adamo concurred. “We had a very good balance—a strong combination of skills. Each side brought something the other lacked, and we did a good job integrating those strengths.”

Just as Adamo and Crowe complemented each other, each company brought a strength to the combined operations. Adamo mentions Crowe’s focus on claims management and underwriting that enhanced the operations of the previous ProNational business. Crowe, in turn, praised ProNational’s expertise in sales and marketing—particularly relationships with agents and brokers, which then, as now, accounted for the majority of ProAssurance’s business.

Crowe acknowledges there were the usual bumps in the road that come from merging two companies but, all in all, he says, “There is no question that this combination allowed us to really put the hammer down and start doing all those other acquisitions.”

And other acquisitions did follow. ProAssurance broadened its expertise, expanded its geographical footprint, and enhanced the coverages it could provide to a constantly evolving healthcare delivery system.

During 1975, the medical profession of Northern California was faced with many significant crises, some of them requiring hard decisions relating to the professional liability insurance covering our practices. Faced with huge increases in professional liability insurance premiums and the near term possibility of no source of coverage, the physicians were polled and it was concluded that they wanted to have their own company. That company is now a viable business entity, and I am proud to serve you as your president.

The Company achieved initial enrollment of 2,356 policyholders on November 14, 1975. Enrollment subsequently increased to approximately 2,800 policyholders as of December 31, 1975. These physicians contributed over $2 million to the Company’s surplus. The enrollment period revealed clearly that there was much pressure for physicians to alter their practices either by time element or by altering practice patterns. This created difficult and challenging administrative problems which for the most part have been resolved. Since that time, there is further evidence of continuing pressure for change.

Dr. James Affleck, Sacramento, has been Chairman of the Underwriting Committee since its inception and has been performing in yeoman-like fashion. We are working hard to improve our underwriting techniques and hope to develop some innovative programs during the coming years. We are not satisfied that the traditional insurance company approach truly responds to the needs and desires of our profession. Therefore, we are seeking appropriate changes in the future. We would appreciate any suggestions which you, as a policyholder, may have for our guidance.

The problem of loss prevention is another area needing attention in the coming months. We are aware that careful and judicious medical care is the best means of avoiding error but there are other areas of activity which certainly deserve careful review and perhaps subsequent alterations of modes of practice. Can the very serious claims, which have cost us so much in the past, be prevented in the future? We believe such claims can be effectively reduced if we are more vigilant. To this end the Company will be establishing a loss prevention program in 1976.

Dr. Duane Collier, San Mateo, is Chairman of the Claims Management Committee and is handling these problems in superb fashion.

The Investment Committee chaired by Dr. Paul Henry of Tulare has been active in placing your money in government notes, certificates of deposit and high quality commercial paper, thereby generating investment income. This conservative investment policy has been adopted by the Investment Committee as the most prudent policy in the Company’s early years.

A final word about Company philosophy as reflected by the Board of Directors. We are proud of the response and the direction achieved in establishing the Company and we are attempting to represent the physician. There are times, however, when our responsibility to keep our Company financially sound for the benefit of all its members may override individual physician preferences. We ask for your help and understanding when this arises.