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“If you are buying a policy with such a long span, having the certainty of a 300-year-old market behind you gives you that reassurance.” Nancy McMahon


“Healthcare companies and systems in all senses are trying to deal with what have been fundamental regulatory changes in recent years.” Kieran Dempsey


  bought for almost unlimited periods.”


McMahon also notes that the actuarial expertise around this product has also improved dramatically, allowing clients to buy relatively bespoke products with pricing on an individual basis. “This means the terms can match what the client really needs and each product is underwritten on its own merits,” she says.


She adds that an additional important point of this product is the fact


that it is written with the backing of the Lloyd’s Market. “It is a long- tail product; in some cases for example where there might be potential pediatric exposures, it can be unlimited,” she says. “If you are buying   market behind you gives you that reassurance.”


Dempsey adds that even a few years ago capacity was limited for this type


of insurance and policies were therefore expensive. Instead, organizations would simply place a sum of money in escrow in the hope it would be adequate to cover any historical unexpected liabilities as they arose.


  


product now, which means it has replaced the need for funds to be placed in escrow,” Dempsey says.


“This product is vital for deals. Healthcare is such a complex industry with so many regulations that apply so it is important to cover any historical liabilities in a robust way.”


He also notes that such a policy is important for the peace of mind


of both buyers and sellers. It is also the perfect risk for the insurance industry to deal with, he says, as claims are potentially very large but also very infrequent.


“Any risk that is high severity but low probability is perfect for insurance,” Dempsey says.


“The industry is going through massive change and this product can


give both parties certainty when coming together in a transaction. There are many stories around unknown liabilities coming back to haunt organizations.


“This policy means they can sleep at night and just concentrate on providing high quality healthcare.” 


Sapphire Blue is a managing general underwriter specializing in developing creative solutions to the complex risk management challenges facing the US healthcare industry.


Known for its creative solutions for long-term care facilities, it also has a long history of developing specialty coverage enhancements such as evacuation expenses, defense for adverse media events, liability exposures that may occur during acquisitions or mergers, and risk inherent in businesses with global facilities.


Coverages are written on a non-admitted basis (except Kentucky) through underwriters at Lloyd’s, London. All London syndicates are rated A (Excellent) by AM Best.


Annual 2014 | HEALTHCARE RISK MANAGEMENT REVIEW | 55


STASIQUE / SHUTTERSTOCK.COM


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