View the video and exhibits at http://www.ambest.com/medical10
State of the Medical Professional
Liability Market: What Brokers,
Doctors and Hospitals Need to Know
After several years of surprising drops in claims frequency, insurers and sector experts
are bracing for a return to a more traditional — and possibly volatile — environment.
LEE McDONALD: Thank you, everyone, for joining us. I’m Lee McDonald with the A.M. Best Company. Welcome to our webcast, “State of the Medical Professional Liability Market: What Brokers, Doctors and Hospitals Need to Know.” We have a nice turnout and a large panel so you’re all in for a busy hour, especially on a day like today. We will be discussing issues around financial strength and ratings. We have an advisory that we publish. If you have any questions about this the website address is very simple, it’s www.ambest.com/terms.html. “A Best’s financial strength rating is an independent opinion of an insurer's financial strength and ability to meet its ongoing insurance policy and contract obligations. It’s based on a comprehensive quantitative and qualitative evaluation that includes balance sheet strength, operating performance and business profile. A financial strength rating opinion, and I can’t say opinion often enough, addresses the relative ability of an insurer to meet its ongoing insurance obligations. The ratings are not assigned to specific insurance policies or contracts. They don’t address other risks, including but not limited to, an insurer’s claims payment policies and procedures, the ability of an insurer to dispute or deny claims, payments on the grounds of misrepresentation or fraud, or any specific liability contractually borne by the policy or contract holder.”
I hope that was clear. If you have any questions, again it’s www.ambest.com/terms.html.
Some of the things that we’ll be referring to and some of the valuable information is in this week’s edition of BestWeek, our U.S. edition. We’ve provided it to you as a complimentary service for people attending this webcast. We have a big package on the state of the medical liability market. We’ve quoted some of the speakers. We’ll be talking to others. We have people in there that we also spoke with as well. We have some tables that are very important. We have a full list of rated carriers, both specialty writers in this market and writers who write in this market as part of a broader range of coverage. We’ve also included a list of companies that have appeared in our impairment and insolvency studies. In fact, I counted it while I was getting ready, there are 45. The point we make with this is this is an important area. It is very volatile. When conditions get tough, or for whatever reasons, there have been quite a number of companies that have experienced extreme financial difficultly. Not the companies on our webcast today but we do like to remind people that this really matters and that financial strength is one of the most, perhaps the most important thing, to worry about.
We’d also like to thank Aon and the American Society for Health Care Risk Management for many of the graphics. We appreciate their help.
Let’s get to our panel. We have senior officers from three insurance companies. They are three commercial insurers active in the medical liability arena with three different perspectives. They are also three secure rated companies and they’re on the list. We’d like to go around once and we’ll start with one of those companies. Dr. Richard Anderson, could you just tell us a little about yourself and your company?
DR. RICHARD ANDERSON: Yes, I’m chairman and CEO of The Doctors Company. We insurer more than 45,000 physicians around the United States and we are headquartered in California.
MARC ZIMMERMANN: Marc Zimmermann, I’m Senior Vice President and Chief Financial Officer of American Physicians Insurance Company. I’ve worked with the company since 2003 and not unlike many of the medical professional liability companies; API was founded during the med mal crisis of the 70s. We’ve been writing in Texas for over 33 years. We’re the second largest insurer in Texas. We also write Oklahoma and Arkansas. We insure over 6,400 physicians and other health care providers. We’re one of the four stand-alone publicly traded med mal companies and we’re traded on the NASDAQ under the ticker symbol AMPH. I appreciate being part of this panel and thank A.M. Best for including me.
STANCIL STARNES: Good afternoon. I’m the chairman and the CEO of ProAssurance, which is publicly traded on the New York Stock Exchange. We insure 55,000 policyholders in the health care field throughout the United States and issued our first policy in 1977.
LAWRENCE DOWNS: Good afternoon. I’m Lawrence Downs. I’m general counsel at the Medical Society of New Jersey. We are the professional organization for physicians of all specialties representing a little over 9,000 physician members. They’re located in Princeton, New Jersey.
PAUL TURNER: Thank you. My name is Paul Turner. I’m a lawyer with a firm in Chicago called McCullough, Campbell and Lane. We present primarily excess insurers and reinsurers of self-insured hospitals throughout the U.S.
CHAD KARLS: I’m Chad Karls. I’m a principal and consulting actuary in the Milwaukee office of Milliman. I’ve been with the firm for 17 years and specialize in actuarial consulting to the medical professional liability sector. I’m a Fellow of the Casualty Actuarial Society and a Member of the American Academy of Actuaries and I appreciate the opportunity to participate in the conversation this afternoon.
McDONALD: We’re going to start with our content. Henry, could you just tell us a little about yourself and your role at A.M. Best?
HENRY WITMER: Thank you. I’ve been with A.M. Best for a little over 10 years. I lead a team of rating analysts who follow all the dedicated medical professional liability insurers. These include the publicly traded companies, mutuals and reciprocals, risk retention groups, captives and a number of other insurance organizations.
McDONALD: Thanks, Henry. Let’s start with you. If we could take a minute to just talk about the overall general financial strength of the industry, which of course is a composite of separate insurance companies and groups of companies. We talked about already that when you don’t have financial strength you end up on our impairment and insolvency list. You could see those names, as well as the well-rated companies, in this week’s BestWeek.
Henry, what are the biggest factors right now shaping the medical liability environment today, from your point of view?
WITMER: Well today I would say that the two main issues are competition and insuring rate adequacy. In almost all jurisdictions we’re receiving reports of very competitive or moderately competitive market conditions. This is exhibited by and is caused by some rate decreases and the more aggressive use of premium credits or discounts. It’s also exacerbated by some new entrants that are attempting to Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9