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                       MMI COMPANIES, INC.
                1996 NON-EMPLOYEE DIRECTOR STOCK
               AND DEFERRED CASH COMPENSATION PLAN


I.   PURPOSE

     The purpose of the Non-Employee Board of Director Stock and
     Deferred Cash Compensation Plan ("Plan") is to provide an
     alternative to Participants to receive restricted stock as a
     part of the reasonable compensation for services rendered by
     them, comparable to the general prevailing practices of
     similar size public companies.

II.  DEFINITIONS

     As used herein, the following definitions shall apply:

     (a)  "Board" means the Board of Directors of the Company.

     (b)  "Cash Account" means the Account established by the
          Company for Participants who elect to defer cash
          compensation.

     (c)  "Committee" means the Personnel and Compensation
          Committee appointed by the Board.

     (d)   "Company" means MMI Companies, Inc.

     (e)  "Fair Market Value" of a share of Stock means the lower
          of the New York Stock Exchange closing price on the
          first or last day of the Offering Period. In the event
          the Stock is not traded on the date as of which the
          Fair Market Value is to be determined, Fair Market
          Value shall be determined as of the next preceding date
          on which the Stock is traded.

     (f)  "Offering Period" means quarterly periods of each year
          commencing January 1, 1997 in which retainers and
          meeting fees are paid.

     (g)  "Participant" means a non-employee director of the
          Company who elects to participate in the Plan by filing
          the appropriate election.


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     (h)  "Stock" means the Common Stock of the Company.

     (i)  "Stock Plan Account" means the account established by
          the Company for each Participant pursuant to the Plan
          who elects to receive Stock in lieu of cash
          compensation.

     III. PAYMENT OPTIONS

          Prior to the time retainers and meeting fees are
          earned, each Participant may elect to receive payment
          of applicable retainers and meeting fees in the
          following forms:

          Cash
          Shares of Stock as described in Section B.
          Deferral of payment as non-qualified deferred
           compensation as described in Section E.
          A combination of the above.

          The payment election shall be made in writing to the
          Secretary of the Company in the form provided by the
          Company. In the absence of an election, all retainers
          and meeting fees shall be paid in cash.  Elections may
          be changed no more than once in any fiscal year and may
          be made only on a prospective basis.  Once retainers or
          meeting fees are earned, elections for such amounts
          shall be irrevocable.  The Company may appoint a
          custodian for purposes of implementing the provisions
          of this Plan.

          A.   Cash
               Retainer paid semi-annually in advance; meeting
               fees paid on meeting date.

          B.   Stock
               The number of shares of Stock granted to a
               Participant shall be calculated as of the end of
               each Offering Period using eighty-five percent
               (85%) of Fair Market Value of the Company's Stock
               for the Offering Period. Shares granted under the
               Plan are fully vested but are non-transferable
               until the director departs from the Board or six
               months following the date of grant, whichever is
               later.

               Shares issued under the Plan to Participants will
               be held by the Company in the Stock Plan Account
               which shall only be in the name of the
               Participant. The Participant may elect to receive
               a stock certificate for the
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               number of shares acquired upon a written request
               made to the Company or
               custodian, however, such shares shall be subject
               to the transferability restrictions set forth in
               this Plan. Dividends will accrue on Stock held in
               the Plan Account for Stock owned and Stock
               equivalents shall be credited to the Stock Plan
               Account in the amount of such dividends.

          C.   A Participant's right to receive Stock in lieu of
               cash, if an election is made, shall not be transferable by
               the Participant other than by will, the laws of descent and
               distribution or pursuant to a qualified domestic relations
               order.

          D.   The maximum number of shares which can be granted
               under the Stock payment option of this Plan shall be Fifty
               Thousand (50,000) shares. The number of shares subject to
               this Plan shall be adjusted in the event of a stock dividend,
               stock split, recapitalization, merger, consolidation,
               reorganization or similar change.

          E.   Deferred Compensation

               Through a properly executed election, the receipt
               of retainers and/or meeting fees may be deferred.
               Deferred compensation under this Plan shall be an
               unsecured obligation of the Company, and not
               evidenced by a note. All deferred amounts shall be
               held as general assets of the Company.
               For Participants who elect to defer cash
               compensation, there shall be established and
               maintained by the Company a Cash Account in the
               name of each Participant electing to defer, which
               shall be 100% vested. Credited to the Cash Account
               shall be amounts equal to the amounts of
               compensation deferred and interest equal to that
               which would have been earned had the deferred
               compensation account balance been invested at a
               rate equal to the "prime rate" in effect on
               January 1 and July 1 of each year at the First
               National Bank of Chicago or such other bank as may
               be designated the Company's principal bank.
               Interest shall be calculated and credited semi-
               annually.

               The minimum deferral period shall be one year. The
               deferral may be made to any date (over one year)
               or to the date of departure from the Board.
               Payment may be elected as a lump sum or in annual
               installments up to 5 years. In the event of death
               or disability, any deferred account balance shall
               be paid in a lump sum.
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          F.   Combination

               Directors can elect to split their compensation,
               i.e. entire retainer or meeting fees, among the
               above options as set forth in the election form.

          G.   It is the intention of the Company that annual
               payment elections under this Plan comply in all respects
               with Rule 16b-3under Section 16(b) of the Securities Exchange
               Act or its successor and that all Participants remain
               Disinterested Persons.
               Accordingly, if any Plan provision is later found
               to cause such an annual election to fail to comply with
               Rule 16b-3 or if any Plan provision would disqualify
               Participants from remaining Disinterested Persons,
               that provision shall be deemed null and
               void, and in all events the Plan shall be
               construed in favor of
               its meeting the requirements of Rule 16b-3.

IV.  ELIGIBILITY

     Only non-employee directors of the Company shall be eligible
     to participate in this Plan.

V.   AMENDMENTS

     This Plan and any provision of this Plan may be amended or
     repealed by the Board except that any amendment which shall
     require stockholder approval in order to comply with SEC
     Rule 16b-3 or its successor shall be submitted to the stockholders
     for their approval and, provided further, any such action shall
     not adversely affect any Participant's rights under this Plan
     relating to elections made prior to such action. Any issue
     of interpretation under this Plan may be made by the Committee.

VI.  EFFECTIVE DATE

     As required by SEC Rule 16b-3, this Plan must be approved by
     stockholders.




Adopted:  February 29, 1996

Amended:  December 5, 1996

Amended:  June 18, 1999

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