2020 Dividend, COVID Credit, and 2021 Rate Adjustments

This year has presented unprecedented challenges to all of us. The COVID-19 pandemic, societal and racial inequities, and the political environment have tested each of us in different ways. We want you to know that the hardships you've endured have not gone unnoticed and we are committed to supporting you. We are optimistic that, with continued hard work, we will come together in solidarity and recovery.

In April 2020, OMIC was one of the first insurance companies in the United States to recognize the severity of COVID-19. We applied a credit of 12.5% to our policyholders' annual premiums to help defray the financial hardship many of you were experiencing. This premium relief was automatically applied in early May 2020 to all active policies.

The pandemic credit amounted to more than $5 million dollars in returned premium to our insureds. We also gave insureds extra time to submit payments. This financial assistance, which we believed was necessary to support our policyholders, was substantially more than other insurance carriers offered their insureds.

Since then, we have monitored the effects of COVID-19 on both our insureds and OMIC. This year, claims frequency is slightly lower than historical norms. The cessation of elective procedures during the second quarter of 2020 likely contributed to this decrease in reported claims. Claims filings based on prior treatment also may have been delayed due to COVID-19 interruptions. Fewer claims reported is, of course, good news for OMIC. However, we must withhold judgment on the long-term claim effects of COVID-19. We may see future increases in reported claims resulting from missed diagnoses, deferred preventative care or delayed treatment, or the “catch up” effect of delayed claims reporting and higher volumes of visits and surgeries expected to be rescheduled after the months of shutdown.

Meanwhile, the costs to defend and settle or pay judgments on claims has continued to increase, a trend seen throughout our industry over the past several years. OMIC's Board of Directors, made up of ophthalmologists like you, recognized the need to budget prudently for these rising claims costs. Therefore, they voted to implement an across-the-board 5% increase for 2021 premium rates. Your renewal documents will reflect these necessary changes.

Finally, while the loss of expected premium due to our one-time COVID-19 credit will have a short-term negative effect on OMIC's financial performance this year, we are confident that the positive impact for our insureds made this the right decision for our company. Be assured, the overall long-term operating and financial outlook for OMIC remains very positive.

We are pleased to announce that, in addition to the 12.5% credit announced in April and applied to all policies in May, OMIC has declared a 5% 2020 dividend to be applied as a premium credit throughout 2021 to all of our physicians' renewal policies. Together, these equal a 17.5% premium return (announced and implemented) for our insured ophthalmologists during this very stressful year.

This is in addition to the nearly $90 million we've returned to insureds over the past 15 years.

Our sincere goal is to welcome every ophthalmologist in America to be part of our OMIC community, and that begins with you and your continued support.

Thank you.