Insurance for Lawyers, by Lawyers 2/25/16 02/24/16 8:36:18 PM
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Paul Ablan Clayton Jones
Insurance for Lawyers, by Lawyers
By Dennis Friend
The Daily Record
Paul Ablan makes it clear that attorneys, like doctors, are held to certain standards. That’s why lawyers need insurance, he said.
In January of 2015, Ablan became president and chief executive officer of Minnesota Lawyers Mutual Insurance Company.
“I’m an attorney, and I was in practice before entering the insurance industry,” he said, but he came to the realization that “I desired to be part of a larger industry but still make use of my legal training.”
Minnesota Lawyers Mutual Insurance Company, or MLM, opened in April 1982, when the company founders felt there a growing need for a “stable lawyers’ malpractice company in Minnesota,” according the MLM website.
“Think of it as professional liability and malpractice insurance, similar to medical malpractice insurance,” Ablan said. The insurance offers protection in case a client chooses to bring an action against an attorney.
Clayton Jones, the regional sales director for MLM in Nebraska and Iowa, said he understands the stresses and concerns attorneys face. He’s not a lawyer, he said, but he has worked with law firms “about 30 years” – as long as MLM has been in existence.
An increasing number of legal malpractice claims in the 1970s and early 1980s had resulted in rising premiums for insurance coverage and increasingly limited coverage.
A history of MLM states: “Rates doubled and doubled again as carriers cut back on coverage. At the recommendation of its Insurance for Members Committee, the Minnesota State Bar Association (MSBA) established a task force.”
That task force eventually recommended that the Minnesota State Bar do what a half-dozen other state bar groups already had done – form a mutual insurance company. ????So, in 1981, the MSBA began a drive to raise $1.5 million of initial capital to get MLM started. MLM asked interested lawyers to purchase guaranty fund certificates, generally about $600 per lawyer, to help reach the financial goal. A year later, MLM had raised the money and was able to open for business.???
“MLM was created when it was difficult for attorneys to find a reliable provider of malpractice insurance,” Jones emphasized.
“Today, we offer a number of advantages. Nevertheless, stability continues to be our top priority. MLM is committed to being an efficient, accountable and permanent risk management resource to members of the legal community.”
Ablan said that “lawyers’ professional liability insurance is all we do and, as a direct writer, our insureds deal directly with us. This means questions are handled more effectively and efficiently because there is no middle man.”
According to its website, MLM realized soon after it opened for business that it had underpriced its policies. MLM initially had looked at premiums charged by other malpractice insurance companies and tried to set competitive rates. However, MLM notified those companies had been charging too little and those other companies wound up abandoning the lawyers professional liability insurance market.
MLM’s solution was to adjust its rates, describing the decision as “not to be the cheapest, but to be the best.”
To accommodate the changing circumstances in the industry, Ablan said, MLM also recognized the need to expand the scope of its objectives to include risk management services to mitigate and remove the dangers to lawyers from errors and omissions or other professional risks.
The idea, Ablan said, was to deliver real-life examples and practical, use-it-now information. In addition to MLM’s traditional newsletter and practice management resources, MLM now offers monthly webcasts with live audience interaction. The programs are then archived and made available for viewing as an On-Demand Service. MLM also encourages its insureds to utilize MLM’s Helpline whenever they have a question about claims avoidance or policy coverage.
Ablan and Jones said the company was among the first in its industry to make it easier for policyholders to do business by launching online applications and renewals. MLM also boasts a renewal rate of more than 90 percent for Nebraska and Iowa.
“That’s a very high retention rate, one of the highest in the industry,” Jones said.
“We’re both an efficient and ‘customer-centric’ provider of services. Our online confidential application and purchase options mean lawyers can purchase new and renewal coverage online anytime. With that, MLM’s knowledgeable staff is always available to offer help and answer questions,” Ablan said.
“We’ve been in Iowa since 1992 and in Nebraska since 1996. We have a certain amount of longevity in those markets,” Jones said. The decision to seek expansion opportunities in other states means MLM now writes business in 15 states: Connecticut, Illinois, Indiana, Iowa, Maryland, Massachusetts, Minnesota, Nebraska, North Dakota, Ohio, Pennsylvania, Tennessee, South Dakota, Virginia and Wisconsin.
“We work hard to offer reasonable, affordable prices and to price our policy fairly, in a manner commensurate with the risk we bear,” Ablan said. “We do the practice of law very little good if our services are not sustainable.”
Steady growth has been coupled with profitability, Jones said, and “We’ve been paying dividends for almost 28 years.” MLM declared its first dividend in 1988, and in 1991, the company passed $10 million in surplus. Today, independent industry-ratings company AM Best gives MLM an excellent, or “A-”, rating.
In total, MLM has paid more than $47 million to policyholders in dividends since 1988. The total will soon increase to $49.5 million as MLM just announced it is returning $2.2 million to its policyholders as dividends later this month.
As of the end of 2015, MLM has more than $168 million in assets and $79.3 million in policyholder surplus.??
For more information, go to: www.mlmins.com