<PAGE>   1
                                                                    EXHIBIT 10.3

October 19, 2000

Jim Morello
Chief Financial Officer
ProAssurance Corporation
100 Brookwood Place
Birmingham, AL  35209

RE:   COMMITMENT FOR ARRANGEMENT OF FACILITY

Dear Jim:

You have advised us that "ProAssurance Corporation" (hereafter referred to as
the "Borrower") seeks financing for the acquisition of Professionals Group Inc.
Attached hereto is a Summary of Terms and Conditions (the "Term Sheet")
describing the general terms and conditions for up to an aggregate of
$150,000,000 credit facility (hereafter referred to as the "Facility").

Based upon and subject to the terms and conditions set forth in this Commitment
Letter (hereafter referred to as the "Commitment Letter"), in the Term Sheet and
in the Fee Letter of even date (the "Fee Letter"), SouthTrust Bank (the "Lead
Arranger") is pleased to advise you of our commitment to act as sole and
exclusive Lead Arranger for the Facility and provide $50,000,000 of the
aggregate principal amount of the Facility. Furthermore, the Lead Arranger
commits to use their reasonable best efforts to secure commitments for the
remainder of the Facility from a syndicate of banks and financial institutions
(the "Banks") reasonably acceptable to the Borrower and the Lead Arranger upon
the terms and subject to the conditions set forth herein, in the Term Sheet and
in the Fee Letter.

The commitments of the Banks and the Lead Arranger hereunder are based upon the
financial and other information regarding the Borrower and its subsidiaries
previously provided to the Banks and the Lead Arranger. Accordingly, the
commitments hereunder are subject to the condition, among others, that (i) there
shall not have occurred after the date of such financial and other information
any adverse change in the business, assets, liabilities (actual or contingent),
operations or condition (financial or otherwise) of the Borrower and its
subsidiaries taken as a whole, (ii) the Banks and the Lead Arranger continue to
be satisfied with the business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) and prospects of the Borrower and
its subsidiaries taken as a whole, (iii) the information concerning the Borrower
and its subsidiaries shall not differ in any material respect from the
information previously provided to the Banks and the Lead Arranger by the
Borrower, (iv) the Banks and the Lead Arranger shall have completed, to their
satisfaction, all legal, tax, business and other due diligence review of the
business, assets, liabilities, operations, condition (financial or otherwise)
and prospects of the Borrower and its subsidiaries, (v) compliance with all
applicable laws and regulations (including compliance of this Commitment Letter
and the transactions described herein with all applicable federal banking laws,
rules and regulations), (vi) the determination of the Banks and the Lead
Arranger that, prior to and during the primary syndication of the Facility,
there shall be no competing issuance of debt, securities or commercial bank
facilities of the Borrower or any of its subsidiaries being offered, placed or
arranged except with the prior written consent of the Banks and the Lead
Arranger, and (vii) the Banks and the Lead Arranger shall have had a reasonable
opportunity and reasonable period of time in which to complete a


<PAGE>   2

syndication of the Facility and (viii) the Lead Arranger shall have received
commitments (including the commitment of the Banks) equaling or exceeding the
aggregate amount of the Facility. Further, the commitments of the Banks and the
Lead Arranger are subject to there not having occurred any material disruption
or adverse change in the financial, banking or capital markets that could, in
the reasonable judgment of the Banks or the Lead Arranger, materially impair the
syndication of the Facility. The Banks shall be entitled, with the Borrower's
consent (which consent shall not be unreasonably withheld), to change the
pricing, terms and structure of the Facility if the Banks determines that such
changes are advisable in order to ensure a successful syndication or an optimal
capital structure; provided that the aggregate amount of the Facility shall
remain unchanged.

The Banks' and the Lead Arranger' commitments hereunder are subject to the
agreements in this paragraph. You agree to actively assist the Lead Arranger
(including, if applicable, after the closing of the Facility) in achieving a
syndication of the Facility that is satisfactory to the Lead Arranger and you.
In the event that such syndication of the aggregate amount of the Facility
cannot be achieved in a manner satisfactory to the Lead Arranger under the
structure outlined in the Term Sheet, you agree to cooperate with the Lead
Arranger in developing an alternative structure that will permit a syndication
of the Facility in a manner satisfactory to the Banks, the Lead Arranger and
you. Such syndication may be accomplished by a variety of means, including
direct contact during the syndication between senior management and advisors of
the Borrower and its subsidiaries, and the proposed syndicate members. To assist
the Lead Arranger in the syndication efforts you hereby agree (i) to provide and
cause your advisors to provide the Lead Arranger and the other syndicate members
upon request with all information deemed reasonably necessary by the Lead
Arranger to complete the syndication, including but not limited to information
and evaluations prepared by you and any of your subsidiaries and their advisors,
or on their behalf, relating to the transactions contemplated hereby, (ii) to
assist the Lead Arranger upon its reasonable request in the preparation of an
Information Memorandum to be used in connection with the syndication of the
Facility and (iii) to otherwise assist the Lead Arranger in its syndication
efforts, including making officers and advisors of the Borrower and its
subsidiaries available from time to time to attend and make presentations
regarding the business and prospects of the Borrower and its subsidiaries, as
appropriate, at a meeting or meetings of Banks or prospective Banks.


You hereby represent, warrant and covenant that to the best of your knowledge
(i) all information, other than Projections (as defined below), which has been
or is hereafter made available to the Banks, the Lead Arranger or the Banks by
you or any of your representatives in connection with the transactions
contemplated hereby ("Information") is and will be complete and correct in all
material respects as of the date made available to the Banks, the Lead Arranger
or the Banks and does not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the statements
contained therein not materially misleading and (ii) all financial projections
concerning the Borrower and its subsidiaries that have been or are hereafter
made available to the Banks, the Lead Arranger or the Banks by you (the
"Projections") have been or will be prepared in good faith based upon reasonable
assumptions. You agree to supplement the Information and the Projections from
time to time until the closing date so that the representation and warranty in
the preceding sentence is correct on the closing date. In arranging and
syndicating the Facility, the Banks and the Lead Arranger will be using and
relying on the Information and the Projections.

By executing this Commitment Letter, you agree to reimburse the Banks and the
Lead Arranger from time to time on demand for all reasonable out-of-pocket fees,
syndication expenses and


<PAGE>   3

other expenses (including, but not limited to, the reasonable fees,
disbursements and other charges of Bradley Arant Rose & White as counsel to the
Banks and the Lead Arranger, and professional fees of any consultants or local
counsel and other experts) incurred in connection with the Facility, including
the preparation of definitive documentation for the Facility and the other
transactions contemplated hereby.

By executing this Commitment Letter, you further agree to indemnify and hold
harmless the Banks, the Lead Arranger, each other Lender and each director,
officer, employee, attorney and affiliate of the Banks, the Lead Arranger and
each other Lender (each such person or entity referred to hereafter in this
paragraph as an "Indemnified Person") from any losses, claims, costs, damages,
expenses or liabilities (or actions, suits or proceedings, including any inquiry
or investigation, with respect thereto) to which any Indemnified Person may
become subject, insofar as such losses, claims, costs, damages, expenses or
liabilities (or actions, suits, or proceedings, including any inquiry or
investigation, with respect thereto) arise out of, in any way relate to, or
result from, this Commitment Letter, the Facility or the other transactions
contemplated hereby and thereby and to reimburse upon demand each Indemnified
Person for any and all legal and other expenses incurred in connection with
investigating, preparing to defend or defending any such loss, claim, cost,
damage, expense or inquiry or investigation, with respect thereto; provided,
that you shall have no obligation under this indemnity provision for liabilities
resulting solely from gross negligence or willful misconduct of any Indemnified
Person. The foregoing provisions of this paragraph shall be in addition to any
right that an Indemnified Person shall have at common law or otherwise. This
Commitment Letter is addressed solely to the Borrower and is not intended to
confer any obligations to or on or benefits on any third party. No Indemnified
Person shall be responsible or liable for consequential damages which may be
alleged as a result of this Commitment Letter.

The provisions of the immediately preceding two paragraphs shall remain in full
force and effect regardless of whether definitive financing documentation shall
be executed and delivered and notwithstanding the termination of this Commitment
Letter or the commitment of the Banks or the Lead Arranger hereunder.

If applicable, it is understood and agreed that the Lead Arranger, in
consultation with you, will manage and control all aspects of the syndication,
including decisions as to the selection of proposed Banks and any titles offered
to proposed Banks, when commitments will be accepted and the final allocations
of the commitments among the Banks. You also acknowledge and agree that the
services of SouthTrust Bank, as sole Administrative Agent, and the services of
the Lead Arranger, will be on an exclusive basis during the term of this
Commitment Letter and that, during such term, no other bank or other financial
institution will be engaged or otherwise consulted or contacted by you regarding
any other proposed senior bank facility for the Borrower or its subsidiaries.

This commitment and the Term Sheet do not summarize all of the terms,
conditions, covenants, representations, warranties and other provisions which
will be contained in the definitive credit documentation for the Facility and
the transactions contemplated thereby. The Banks and the Lead Arranger shall
have the right to require that such credit documentation include, in addition to
the provisions outlined herein and in the Term Sheet, provisions considered
appropriate by the Banks and the Lead Arranger for this type of financing
transaction, as well as provisions that the Banks and the Lead Arranger may deem
appropriate after they are afforded the opportunity to conduct and complete, to
their satisfaction, the due diligence review described above.


<PAGE>   4

Except as required by applicable law, this Commitment Letter, the Fee Letter and
the Term Sheet and the contents of such documents shall not be disclosed by you
to any third party without the prior consent of the Banks and the Lead Arranger,
other than to your attorneys, financial advisors and accountants, in each case
in connection with your evaluation hereof and to the extent necessary in your
reasonable judgment. You acknowledge and agree that the Banks and the Lead
Arranger may share with their respective affiliates any information relating to
the Facility, the Borrower and its subsidiaries.

You are not authorized to show or circulate this Commitment Letter, the Fee
Letter or the Term Sheet, or disclose the contents thereof, to any other person
or entity (other than to your directors, officers and legal and financial
counsel, regulator, rating agencies, and any seller and representatives of any
seller, in each case who need to know the terms hereof, and the other
transactions contemplated thereby and hereby; provided that (i) each of such
persons shall agree to be bound by the confidentiality provisions hereof and
(ii) you shall be liable for any breach of such confidentiality provisions by
any such person), except as may be required by law or applicable judicial
process. If you show or circulate this Commitment Letter, the Fee Letter or the
Term Sheet, or disclose the contents thereof, in breach of the foregoing
sentence, then you shall be deemed to have accepted this Commitment and the Fee
Letter.

The Banks shall have the right to review and approve any public announcement or
public filing made after the date hereof relating to any of the transactions
contemplated hereby or the Banks or any of its affiliates, as the case may be,
before any such announcement or filing is made (such approval not to be
unreasonably withheld or delayed).

The Banks' commitment with respect to the Facility set forth above shall
terminate at 5:00p.m. on October 31, 2000, unless this Commitment Letter is
accepted by the Borrower in writing prior to such time and, if accepted prior to
such time, shall expire at the earlier of (i) consummation of this transaction,
(ii) termination of the definitive purchase agreement with regard to this
transaction, (iii) the occurrence of any event that the Banks reasonably
believes in good faith has, or could be expected to have, an adverse effect on
the business, properties, operations, condition (financial or otherwise) or
prospects of the Borrower or any of its subsidiaries or the feasibility of the
transactions contemplated hereby, and (iv) 5:00 p.m. on January 31, 2001, if the
closing of this transaction shall not have occurred by such time.

This Commitment Letter may be executed in counterparts which, taken together,
shall constitute an original. This Commitment Letter, together with the Term
Sheet and the Fee Letter of even date herewith, embodies the entire agreement
and understanding between the Banks, the Lead Arranger and the Borrower with
respect to the specific matters set forth above and supersedes all prior
agreements and understandings relating to the subject matter hereof. No party
has been authorized by the Banks or the Lead Arranger to make any oral or
written statements inconsistent with this Commitment Letter.

THIS COMMITMENT LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF ALABAMA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF
LAW.

This Commitment Letter may not be assigned without the prior written consent of
the Banks and the Lead Arranger.


<PAGE>   5


If you are in agreement with the foregoing, please execute the enclosed copy of
this Commitment Letter and the Fee Letter (and pay the Acceptance Fee) no later
than the close of business on October 31, 2000. This Commitment Letter will
become effective upon your delivery to the Lead Arranger of executed
counterparts of this Commitment Letter and the Fee Letter (and receipt by the
Banks of the Acceptance Fee). This Commitment Letter shall terminate if not
accepted by you prior to that time. Following acceptance by you, this Commitment
Letter shall expire at 5:00 p.m. on January 31, 2001 unless the Facility is
closed by such time.

Very truly yours,

SOUTHTRUST BANK

By: /s/ John A. Lotz
    -----------------------------------

Name: John A. Lotz
     ----------------------------------

Title: Senior Vice President
      ---------------------------------


COMMITMENT ACCEPTED AND AGREED TO
THIS 31ST DAY OF OCTOBER, 2000:
     ---        --------  ----

ProAssurance Corporation

By: /s/ James J. Morello
    -----------------------------------

Name: James J. Morello
     ----------------------------------

Title: Chief Financial Officer
      ---------------------------------

<PAGE>   6

SUMMARY OF TERMS AND CONDITIONS


                                  "TERM SHEET"


                                OCTOBER 19, 2000

Borrower:                  ProAssurance Corporation

Agent:                     SouthTrust Bank

Administrative Agent:      SouthTrust Bank

Lenders:                   A syndicate of banks to be arranged by SouthTrust
                           Bank which will be acceptable to the Borrower.

                           Subject to all of the following terms and conditions
                           being satisfactory to the Borrower and the Agent, the
                           Agent agrees to commit the following amounts to these
                           credit facilities:

                           SouthTrust Bank - $36.667m Term (33.3%)
                           SouthTrust Bank - $13,333m Revolver (33.3%)

Credit Facilities:         A $110 million Term loan facility which will be
                           secured with the stock of certain direct and indirect
                           subsidiaries of ProAssurance Corporation. This loan
                           will amortize based on a minimum principal repayment
                           of $10,000,000 per year ($2,500,000 per quarter)
                           plus 50% of excess cash flow, defined as 50% of
                           "cash from operations" less the minimum $10,000,000
                           debt service. The 50% excess cash flow payment from
                           the borrower will be an annual payment and the total
                           payment in any one year will not exceed $25,000,000.
                           This facility will bear an interest rate equal to
                           the rates as set forth in the attached addendum.

                           A $40 million Revolving Credit Facility for general
                           corporate purposes. This Credit Facility will be
                           cross-collateralized with the above Term Loan
                           facility. This facility will bear an interest rate
                           equal to the rates as set forth in the attached
                           addendum.



                                       1

<PAGE>   7

Purpose:                   Proceeds of the Term Loan will be utilized to acquire
                           the stock of Professionals Group Inc. (PIMC)

Term:                      Two years on the Revolving Credit Facility and Five
                           years on the Term Loan Facility.

Repayment:                 On the Revolving Credit Facility, the Borrower may
                           borrow, repay, and reborrow amounts so long as the
                           aggregate principal amount outstanding at any one
                           time does not exceed $40,000,000. The Revolving
                           Credit Facility will be due in full at its maturity
                           subject to renewal by the lenders. Interest on both
                           Credit Facilities will be due monthly or at LIBOR
                           refunding dates.

Interest Rates & Fees:     See Addendum 1, which is attached hereto.

Prepayments:               The Company may prepay amounts (which amounts will
                           be permanent reductions of the Term Loan Facility)
                           without penalty subject only to reimbursement of
                           potential breakage fees in the case of LIBOR
                           borrowings.

Conditions Precedent to
 Closing:                  The initial borrowings under the Credit Facilities
                           will be subject to satisfaction of the following
                           conditions precedent:

                  (I)      The negotiation, execution and delivery of definitive
                           documentation with respect to the Credit Facilities
                           reasonably satisfactory to the Agent.

                  (II)     The Agent shall have received certified copies of
                           articles of incorporation, bylaws, resolutions and
                           other corporate documentation reasonably requested by
                           the Agent and officer's certificates regarding
                           incumbency and solvency in form and substance
                           reasonably satisfactory to the Agent.

                  (III)    The Agent shall have received and, in each case, be
                           reasonably satisfied with (a) quarterly financial
                           statements for each fiscal quarter of the Borrower
                           after December 31, 2000, and (b) such other
                           information relating to the Borrower and its
                           subsidiaries as the Agent may reasonably require.

                                       2
<PAGE>   8

                  (IV)     There shall not have occurred a material adverse
                           change since June 30, 2000 in the business, assets,
                           liabilities, operations or financial condition of the
                           Borrower and its subsidiaries or in the facts and
                           information regarding such entities as represented or
                           otherwise known to the Agent to date.

                  (V)      In the case of the initial borrowings under the
                           Credit Facilities, the Agent shall have received a
                           reasonably satisfactory certificate from the chief
                           financial officer of the Borrower as to the financial
                           condition and solvency of each of the Borrower and
                           the Subsidiaries.

                  (VI)     The Agent shall have received (a) reasonably
                           satisfactory opinions of counsel to the Borrower and
                           the Subsidiaries [(which shall cover, among other
                           things, authority, legality (including compliance
                           with Reg. U)], validity, binding effect and
                           enforceability of the documents for the Credit
                           Facilities) and such resolutions, certificates and
                           other documents as the Agent shall reasonably
                           require.

                  (VII)    In the case of the initial borrowings under the
                           Credit Facilities, evidence of receipt of all
                           governmental, shareholder and other, if any, consents
                           and approvals necessary in connection with the
                           related financings and other transactions
                           contemplated hereby except where the failure to
                           obtain such consents or approvals would not,
                           individually or in the aggregate, have a material
                           adverse effect on the business, assets, liabilities,
                           operations or financial condition of the Borrower and
                           its subsidiaries, taken as a whole (a "Material
                           Adverse Effect").

                  (VIII)   In the case of borrowings under the Credit
                           Facilities, any action, suit, investigation or
                           proceeding pending in any court or before any
                           arbitrator or governmental authority that would
                           reasonably be expected to have a material adverse
                           effect on the financial condition of the Borrower and
                           its subsidiaries taken as a whole or on the ability
                           of the Borrower taken as a whole to perform their
                           respective obligations under the documents to be
                           executed in connection with the Credit Facilities.



                                       3
<PAGE>   9

                  (IX)     The Borrower shall have paid to the Lenders and the
                           Agent all fees and expenses due and payable at
                           closing of the Credit Facilities.


                  (X)      The Lenders will have received the company's audited
                           financial statements for the fiscal year ending
                           December 31, 1999.

Representations &
Warranties:                Usual and customary for senior credit facilities of
                           this type (subject to appropriate materiality and
                           reasonableness limitations), to include without
                           limitations: (I) corporate status; (II) corporate
                           power and authority/enforceability; (III) no
                           violation of law or contracts or organizational
                           documents; (IV) no material litigation; (V)
                           correctness of specified financial statements and no
                           material adverse change since December 31, 1999;
                           (VI) no required governmental or third party
                           approvals; (VII) use of proceeds/compliance with
                           margin regulations; (VIII) status under Investment
                           Company Act; (IX) ERISA; (X) environmental matters;
                           (XI) perfected liens and security interests;
                           (XII) payment of taxes; and consummation of the
                           transaction.

Covenants:                 Financial covenants under the Credit Facilities to
                           include (but not limited to):

                           -  Maintenance on a rolling four quarter basis (for
                              the first quarter ending 3/31/01, actual results
                              will be used; quarterly results will accumulate
                              thereafter until the rolling four quarters are
                              achieved) of a Maximum Leverage Ratio (total
                              funded debt/EBITDA) as of the end of each fiscal
                              quarter not to exceed: 3.0:1.0.


                                       4



<PAGE>   10


                           -  Maintenance on a rolling four quarter basis (for
                              the first quarter ending 3/31/01, actual results
                              will be used; quarterly results will accumulate
                              thereafter until the rolling four quarters are
                              achieved) of a Fixed Charge Coverage Ratio
                              (defined as: After-Tax Income + Total Depreciation
                              & Amortization + Interest Expense/Current
                              Maturities of Long Term Debt + Interest Expense),
                              of not less than 1.25X through December 31, 2001
                              and 1.5X thereafter.

                           -  At the end of each fiscal year, the Borrower will
                              be required to maintain a Minimum Net Worth equal
                              to the greater of 90% of the consolidated Net
                              Worth of ProAssurance Corporation upon completion
                              of the merger or $290,000,000 plus 75% of net
                              income (excluding losses) following December 31,
                              2000.

Events of Default          Usual and customary for senior credit facilities of
                           this type (subject to materiality and grace periods
                           to be negotiated), and to include, without
                           limitation, (I) nonpayment of principal, interest,
                           fees or other amounts, (II) violation of covenants,
                           (III) material inaccuracy of representations and
                           warranties, (IV) cross-default to other material
                           agreements and indebtedness, (V) bankruptcy or
                           insolvency, (VI) material judgments, (VII) ERISA,
                           (VIII) actual or asserted invalidity of any loan
                           documents or security interests, or (IX) Change in
                           Control.

Assignments/
Participations:            Each Lender will be permitted to make assignments in
                           minimum amounts of $5 million to other financial
                           institutions approved by the Borrower and the Agent,
                           which approval shall not be unreasonably withheld.
                           Lenders will be permitted to sell participations with
                           voting rights limited to significant matters such as
                           changes in amount, reduction in rate and extension of
                           maturity date. An assignment fee of $3,500 is payable
                           by the Lender to the Agent upon any such assignment
                           occurring (including, but not limited to an
                           assignment by a Lender to another Lender).


                                       5




<PAGE>   11

Waiver &
Amendments:                Amendments and waivers of the provisions of the loan
                           agreement and other definitive credit documentation
                           will require the approval of Lenders holding loans
                           and commitments representing more than 66.667% of
                           the aggregate Facility, except that the consent of
                           all the Lenders affected thereby shall be required
                           with respect to (I) increases in commitment amounts,
                           (II) reductions of principal, interest, or fees,
                           (III) extensions of final maturities and (IV)
                           releases of all or substantially all collateral.

Indemnification:           In the definitive documentation for the Credit
                           Facilities the Borrower shall indemnify the Lenders
                           from and against all losses, liabilities, claims,
                           damages or expenses relating to their loans, the
                           Borrower's use of loan proceeds or the commitments,
                           including but not limited to reasonable attorney's
                           fees and settlement costs, but only to the extent
                           that such losses, liabilities, claims, damages or
                           expenses do not result from the bad faith, gross
                           negligence or willful misconduct of the indemnified
                           party.

Closing:                   With respect to the Credit Facilities, on or before
                           January 31, 2001.

Governing Law:             Alabama

Fees/Expenses:             As outlined in ADDENDUM 1.

Other:                     This term sheet is intended as an outline only and
                           does not purport to summarize in detail all the
                           conditions, covenants, representations, warranties
                           and other provisions which would be contained in
                           definitive legal documentation for the Credit
                           Facilities contemplated hereby. Each of the
                           Borrower, the Subsidiaries, the Agents and the
                           Lenders shall waive its right to a trial by jury.



                                       6
<PAGE>   12

ADDENDUM 1

                            INTEREST RATES AND FEES

UNUSED COMMIT. FEE         On the Revolving Credit Facility a fee payable to the
                           Lenders on the average daily unused commitment amount
                           (calculated on the basis of actual number of days
                           elapsed in a year of 360 days) per the Performance
                           Pricing grid cited below, payable quarterly in
                           arrears.

INTEREST RATES:            The Facility shall bear interest at a rate equal to
                           LIBOR plus the Applicable Margin. Interest will be
                           based on a 360 Day Year. Borrower will elect the
                           LIBOR interest rate two business days prior to
                           the maturity of any LIBOR rate interest period or any
                           future LIBOR advances.

                           An Alternate Borrowing Rate will be available which
                           will be the SouthTrust Base Rate.

                           The Borrower may select interest periods of 1, 2, or
                           3 months for LIBOR loans, subject to availability.
                           Interest will be due at the maturity of the LIBOR
                           period. In the case of the Alternate Borrowing Rate,
                           Interest will be payable monthly.

                           In the event of default all loans shall bear interest
                           at a rate per annum of 2% above the applicable
                           interest rate.

PERFORMANCE PRICING:       The Applicable Margin shall be the applicable rate
                           per annum set forth in the table below opposite the
                           ratio of Funded Debt to EBITDA (as defined in the
                           Term Sheet).


<TABLE>
<CAPTION>
Funded Debt to                            Unused               Applicable Margin
EBITDA Ratio                                Fee                 for LIBOR Loans
--------------                            ------               -----------------
<S>                                       <C>                  <C>
Less than 1.0x                            8.0 bps              75.0 bps

Greater than or equal to 1.0x,
but less than 2.0x                        10.5 bps             100.0 bps

Greater than or equal to 2.0x,
but less than 3.0x                        12.5 bps             125.0 bps

Note: pricing will be at this level until the first quarter of FY01 results are
calculated.

</TABLE>


OTHER FEES:                25 bp One Time Commitment Fee (Bank Group pro rata)



                                       7

<PAGE>   13

SouthTrust Bank, N.A.
P.O. Box 7554                                             [SOUTHTRUST BANK LOGO]
Birmingham, Alabama 35290


October 19, 2000


Jim Morello
Chief Financial Officer
ProAssurance Corporation
100 Brookwood Place
Birmingham, AL 35209


Dear Jim:


This letter is the FEE LETTER referred to in that certain commitment letter of
even date herewith (the "Commitment Letter") from SouthTrust Bank ("Lead
Arrangers") to you, whereby the Banks have furnished its commitment to provide
the Borrower a $40,000,000 Revolving Loan and a $110,000,000 Term Loan, subject
to the terms and conditions set forth therein and in the Term Sheet attached
thereto.

To induce the Banks to execute and deliver the Commitment Letter and provide
its Commitment set forth therein, the Borrower hereby agrees to pay to the
Banks, for its own account an Underwriting / Arrangement Fee equal to 6.7 basis
points of the aggregate principal amount of the Facility as set forth in the
Term Sheet, of which $50,000 of such Underwriting Fee shall be due and payable
upon execution and delivery by the Borrower of this Fee Letter and the
Commitment Letter (the "Acceptance Fee"), with the remaining portion of such
Underwriting Fee due and payable on the closing date of the Facility. The
entire amount of the Underwriting Fee shall be fully earned upon the Borrower's
acceptance of the Commitment Letter and its execution and delivery to the Lead
Arranger of the Commitment Letter and this Fee Letter.

In addition, in order to induce the Lenders to provide their commitments, the
Borrower hereby agrees to pay to the Lead Arranger, for the account of the
Lenders, including the Banks (on a pro rata basis in accordance with their
final allocated commitments) 25 basis points in upfront fees (the "Upfront
Fees"). This level of upfront fees is mutually agreed to in order to
successfully complete the syndication of the Facility.

In addition, to induce SouthTrust Bank to agree to act as Administrative Agent
in connection with the Facility the Borrower agrees to pay SouthTrust Bank, for
its own account and in its capacity as Administrative Agent, an annual
administrative fee in the amount of $49,500 (3.3 basis points), due and payable
on the Closing Date and thereafter on each anniversary of the Closing Date
until the Facility has been terminated and all amounts owing thereunder are
paid in full.

The Borrower also agrees to pay the unused commitment fee and other fees in the
amounts and at the times set forth in the Term Sheet. It is understood that no
Lender participating in the Facility will receive compensation from you outside
the terms contained herein, in the Commitment Letter and in the Term Sheet in
order to obtain its commitment. The Banks and the Lead Arranger may allocate
among their affiliates any of the fees payable hereunder in their sole
discretion.

<PAGE>   14

Except as required by applicable law, this letter and the contents hereof shall
not be disclosed by you to any third party without the prior written consent of
the Banks and the Lead Arranger, other than as permitted by the Commitment
Letter.

This letter may be executed in counterparts which, taken together, shall
constitute an original. This letter, together with the Term Sheet and the
Commitment Letter of even date herewith, embodies the entire agreement and
understanding between the Banks, the Lead Arranger and the Borrower with respect
to the specific matters set forth above and supersedes all prior agreements and
understandings relating to the subject matter hereof. No party has been
authorized by the Banks or the Lead Arranger to make any oral or written
statements inconsistent with this letter.

THIS LETTER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF ALABAMA, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.

This letter may not be assigned by the Borrower without the prior written
consent of the Banks and the Lead Arranger.

The commitments of the Banks and the Lead Arranger as set forth in the
Commitment Letter are subject to the receipt of a signed copy of the Fee Letter
together with a signed copy of the Commitment Letter and payment of the
Acceptance Fee. If the Borrower is in agreement with the foregoing, please sign
the enclosed copy of this Fee Letter and return it to the Banks and the Lead
Arranger, together with an executed copy of the Commitment Letter and the
Acceptance Fee by no later than 5:00 p.m. on October 31, 2000.

Very Truly Yours,


SOUTHTRUST BANK

By:    /s/ John A. Lotz
       --------------------------------
Name:  John A. Lotz
       --------------------------------
Title: Senior Vice President
       --------------------------------


COMMITMENT ACCEPTED AND AGREED TO THIS 31st DAY OF OCTOBER, 2000

ProAssurance Corporation

By:    /s/ James J. Morello
       --------------------------------
Name:  James J. Morello
       --------------------------------
Title: Chief Financial Officer
       --------------------------------