New Top Cats Emerge In Allied Medical

With all the big cats getting away from theallied medical professional liability arena, the mice are not justplaying, they are taking over the house.

The departure of The St. Paul Companies, MIIX, Reliance,Frontier and a number of other major carriers, from not only thetraditional medical malpractice market but the allied medicalprofessional liability market as well, has increased the number ofopportunities for smaller and regional carriers.

“They have been doing it all along, but with admitted carriersexiting, medical surplus [lines] carriers are stepping up to theplate,” commented Richard Jordan, vice president in charge of theMedical Professional Liability Division of Market Finders, amanaging general agency in Louisville, Ky.

Market Finders has been in business for approximately 30 years,and the Medical Professional Liability Division is nearly 13 yearsold. Lately, Mr. Jordan has seen a spike in lab, CertifiedRegistered Nurse Anesthetist (CRNA), and physical therapistsubmissions.

Despite the recent growth in these three allied lines, Mr.Jordan remains highly aware of the unique risks associated witheach.

According to Mr. Jordan, “the typical cause of loss for a lab isfailure to diagnose or loss of specimen.” Typical claims for CRNAs“would be death or some type of neurological deficit from theadministration of the anesthesia, and physical therapists would besome type of physical damage from the manipulation.”

Regarding tough-to-place classes of allied health careprofessional liability insurance, Mr. Jordan confidently says, “wehave not necessarily found any classes that are uninsurable. Wehave seen uninsurable risks, but not necessarily classes.”

The exits of The St. Paul and other major players from theallied medical professional market has been a boon to players whospecialize in niche markets, according to Letha Heaton, vicepresident of sales and marketing for Shand Morahan in Deerfield,Ill.

Ms. Heaton said she has seen niche lines of allied medicalbusiness lead to other business opportunities. She points toincreases in non-prescription health care and non-FDA health carecoverage opportunities, such as alcohol rehabilitation clinics,holistic medicine facilities and health spas, as allied lead-ins tomore traditional lines of business.

Nevertheless, her most dramatic growth and expansion of alliedhealth care business has been in nursing home coverage, an areawhich Ms. Heaton says remains competitive even after the largeplayers called it quits.

She maintains that nursing home coverage is a profitable linewhen approached correctly, and that means “underwriting to theirown specs, writing on claims-made forms, and not being responsiblefor previous claims.” In other words, starting each caseafresh.

The risks associated with nursing home coverage, acknowledgesMs. Heaton, include the fact that many nursing homes areill-capitalized. She also said that government regulations aredramatically increasing as a result of the widespread recognitionthat, very often, an inexperienced, underpaid staff will be on thefront lines of care for high risk medical patients, like theelderly and terminally ill.

Managing general agencies are also enjoying increased attentionas they become the focal point for hard-to-find allied healthprofessional liability policies and specialized products.

Bernard G. Heinze, executive director of the AmericanAssociation of Managing General Agents in King of Prussia, Pa.,said: “Following the hardening of the market and the move by someof the carriers in the admitted market to discontinue or reducetheir underwriting of certain health care lines in order to returnto core business, AAMGA members have seen a dramatic increase inthe number of submissions and proposals for cover.”

“We have seen retail agents and other producers tapping into thespecialization of MGA's who, by virtue of their experience, areaffording creative programs and business solutions to addressproper protection for these risk exposures,” Mr. Heinzecontinued.

Jim Roe, president of Arlington/Roe and Co., an MGA inIndianapolis, agrees with Mr. Heinzes characterization that MGAsadd value through specialization.

The removal of the large players from his region has allowed hisfirm to create a separate unit to concentrate solely on medicalmalpractice coverage, he said. Mr. Roe said that this new unitenables Arlington/Roe to “actively market specialized products inthe Midwest”, something the larger players have trouble doing ontheir own.

Despite the opportunities being created by the big carriersdeparture from some allied health care professional liabilitymarkets, even the regional firms benefiting from this power vacuumare carefully avoiding business too far away from their comfortzones.

Eric R. Anderson, vice president of marketing and communicationsfor the Washington, D.C. based-NCRIC Group Inc., confirms that “thewithdrawal of St. Pauls obviously opens up some significantopportunities for allied medical professional liability insurancecarriers looking to expand market share.”

Nevertheless, Anderson says that NCRIC, which was established in1980 as a physician-governed medical professional liabilityinsurance carrier, will continue to view its allied health businessas an extension of its core medical malpractice coverage forphysicians.

NCRIC, therefore, chooses to write medical professionalliability coverage for allied health care professionals such asnurse midwives, surgical assistants and certified nurseanesthetists, but is not rushing to write hospitals, clinics ornursing homes.

According to Mr. Anderson, “These risks do not fit within ourcore competencies.”

This risk-averse scenario might be proof that the regional andniche-oriented “mice” have not entirely decided to take over thehouse in the cats absence after all. They might just be gettingmore comfortable in their respective rooms.

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, September 9, 2002.Copyright 2002 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.