A.M. Best Downgrades FSR, Credit Rating for MedMal Direct Insurance Co.; MPL Insurer Requests to No Longer Participate in Rating Process

A.M. Best has downgraded the Financial Strength Rating to B- (Fair) from B++ (Good) and the Long-Term Issuer Credit Rating to “bb-” from “bbb” of MedMal Direct Insurance Company (MedMal Direct) (Jacksonville, FL). The outlook of these Credit Ratings (ratings) has been revised to negative from stable. Concurrently, A.M. Best has withdrawn the ratings as the company has requested to no longer participate in A.M. Best’s interactive rating process.

The ratings reflect MedMal Direct’s balance sheet strength, which A.M. Best categorizes as adequate, as well as its marginal operating performance, limited business profile and marginal enterprise risk management (ERM).

These rating actions are related partly to MedMal Direct’s prospective balance sheet strength and A.M. Best’s concerns related to ultimate reserve adequacy, and the potential loss emergence and legal actions related to extra contractual obligations and excess of policy limits (as an event subsequently disclosed in the company’s year-end 2017 statutory annual statement). Unfavorable outcomes from each of these could potentially have a negative influence on the parent’s already high debt leverage and ability to cover its cost of capital. Concerns regarding reserve adequacy have increased following recent changes in claims management and changes in reserving practices added to the limitations on the company’s own data due to its relatively short time in operation, as well as adverse reserve development in calendar-year 2017 and each of the prior three accident years. The 2017 reserve increase contributed to a 20% decrease in policyholders’ surplus and significantly decreased capitalization.

The company’s operating performance has been below the medical professional liability (MPL) averages and trending negatively in recent years culminating in the significant loss reported in 2017. While claims frequency remains relatively flat, the MPL market is in a prolonged soft pricing cycle. Market dynamics continue to see private practice physicians leaving for employment opportunities with physician groups or hospitals, mergers among physician groups and health care systems, greater medical responsibilities being taken on by physician extenders that were performed previously by physicians, as well as other changes. The business profile is limited by MedMal Direct’s concentration of underwriting risk in MPL lines, mainly in Florida. In recent years, Florida has reversed certain tort reforms that would keep claims frequency and severity in check. However, the company has partially mitigated this by writing most policies at low limits.

Furthermore, in A.M. Best’s opinion, the company’s ERM is marginal. While the company has brought in seasoned leadership in key management positions in recent years, those changes have either followed material deficiencies in operations or precipitated corrective actions and contributed to the company’s marginal operating performance.

The outlooks have been revised to negative based on the challenges facing this company, as earnings and future capital formation may be constrained due to the potential for additional reserve strengthening in the near term and what could become of the legal actions related to the adverse excess of policy limits claims judgment in January 2018. Management is currently reviewing its options in this matter.

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Healthcare Matters: 2018 Medical Professional Liability Market Update

Healthcare Matters launched new video segments from its “MPLI Executive Insights” series, where executives from companies involved with medical malpractice insurance are interviewed about trending topics and contemporary challenges facing the industry at large.

The two new segments of “MPLI Executive Insights” feature interviews from the 2018 Professional Liability Underwriting Society (PLUS) Healthcare and Medical PL Symposium in Chicago.

In the first video, Bill Burns, vice president of insurance research at the global investment management firm Conning, expertly discusses the state of the medical professional liability (medical malpractice) insurance industry. In this segment, Burns examines the challenges associated with operating in a soft market where medical malpractice insurance rates have not changed significantly in more than a decade, whether the market will eventually harden or accumulated surplus has created a new normal for MPL insurance pricing and the potential for a few large MPL insurance companies monopolizing the industry.

In the second video, Andrew Charron, head of healthcare for specialty insurance provider CapSpecialty, shares his insight into the miscellaneous facilities insurance market. In this segment, Charron discusses the booming home health market, challenges associated with a growing market but shrinking premium value and how underwriting speed can often determine who ultimately gets a potential insured’s business.

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CFC Expands Cyber Policies for U.S. Healthcare Providers

Specialty-insurance provider CFC Underwriting recently announced the newest version of its cyber insurance product for U.S. healthcare providers. With the latest policy, CFC enhances its combined cover for privacy and operational disruption with industry-specific features to help healthcare organizations prepare for and respond to cyber incidents as well as comply with industry regulations.

“While most healthcare providers are aware of their privacy and data breach exposures, they can easily overlook cover for operational disruption. The unprecedented increase in malware attacks has shown that operational exposures must be addressed – in fact, we’re now seeing the costs of operational disruption and rebuilding far exceed what a large-scale privacy breach might cost the same entity,” said CFC Cyber Product Leader, James Burns. “Our stand-alone cyber product for the U.S. healthcare sector is tailored to their unique risks, helping limit the impact of a cyber incident on their organization.”

According to CFC, its latest cyber insurance product addresses the exposures and regulatory requirements unique to U.S. healthcare organizations and ensures that core elements of cover are available each time a crisis strikes, even if a policyholder experiences multiple cyber incidents in the same policy period.

CFC’s cyber policies offer the provision of first party cover on an “each and every claim” basis and don’t restrict policyholders with policy aggregates. Additionally, CFC’s cyber offering for U.S. healthcare providers includes cover for HIPAA corrective action plans and cover for bodily injury resulting from a cyber attack alongside cover for the costs associated with improving risk management controls following a breach, system repair costs and incident response costs in addition to the limit.

“CFC offers a market-leading cyber insurance product backed by a global response capability which ensures our policyholders not only have comprehensive cover, but that they can recover quickly from cyber incidents,” Burns said.

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A.M. Best Affirms “A” (Excellent) Rating for NORCAL Mutual Insurance Company, Outlook Revised to Stable

A.M. Best has again affirmed a rating of “A” (Excellent) for NORCAL Mutual Insurance Company and its affiliates, in addition to revising the ratings outlook to “stable.” The revised outlooks are attributed to the improvements in underwriting and operating performance trends, along with A.M. Best’s expectation of sustaining positive trends moving forward.

“Our strategic efforts to fortify our financial stability have resulted in NORCAL being well positioned to receive a stable rating. Our 34-year A-rating track record is a testament to our prudent decision making and the ability to adapt as the landscape of healthcare continues to change,” said Mark Johnson, NORCAL Mutual chief financial officer.

NORCAL Mutual Insurance Company shares the A.M. Best rating with NORCAL Specialty Insurance Company, Medicus Insurance Company, FD Insurance Company and Preferred Physicians Medical Risk Retention Group, a Mutual Insurance Company.

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MagMutual Declares New Dividend, Owners Circle Options for 2018

MagMutual Insurance Co. announced a 10-percent premium return to policy owners as well as flexible options for its dividend and Owners Circle reward programs.

According to the insurer of medical liability, MagMutual policyholders have received over $215 million in dividends since inception.

“MagMutual continues to pay more than ever to our policyholders, even while our competitors continually give back less,” said Neil Morrell, president and chief executive of MagMutual. “Returning dividends is what a mutual should do, whenever possible. Thanks to our strong performance, we have paid out more dividends over the last seven years than in the entire history of our company.”

The MagMutual Board of Directors, in recognition that policyholders may prefer to receive an alternative dividend in lieu of the Owners Circle credit, is also offering an additional 3-percent dividend return. Policyholders who prefer this option will receive a 13-percent dividend.

The MagMutual Board of Directors also declared a 10-percent Owners Circle allocation to recognize policyholders’ ownership in a financially strong company. Those who do not want the alternative 3-percent dividend will receive their 10-percent Owners Circle credit.

“We at MagMutual constantly try to serve our policyholders,” said Joe Wilson, MD, executive chairman of MagMutual. “We do this by delivering the exceptional products, services and pricing and paying among the highest dividends in the industry. We have been pleased with the amount we’ve been able to give back in recent years, and hope our policyholders are pleased as well.”

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Hiscox Offering New Outpatient Mental Healthcare Professional Liability Coverage

Hiscox, the international specialist insurer, announced new coverages in their insurance policy for US businesses in the mental health industry. Hiscox PRO Outpatient Mental Healthcare Professional Liability offers a wide variety of specialized benefits for mental health professionals tailored to cover emerging risks in the allied healthcare field.

Underscoring the need and demand for this specialized insurance solution, the Bureau of Labor Statistics predicts job growth for mental health counselors will increase by as much as 23 percent by 2026. Comparatively, the average projected job growth rate for all occupations during the same time period is 7 percent.

“Mental health treatment options, such as remote therapy and telehealth, are rapidly expanding in the US,” said Alicia Marsiglia, vice president and Allied Healthcare Product Head for Hiscox in the US. “As a result, we considered the unique exposures of the latest treatments and offerings in this space and designed a policy that provides greater coverage for companies on the cutting edge of this evolving industry.”

Coverage will apply to claims involving a variety of areas and treatment options, including:

  • Outpatient mental healthcare
  • Behavioral therapy
  • Substance abuse counseling
  • Medication management
  • Partial hospitalization or intensive outpatient programs
  • Remote therapy (teletherapy)

Medical directors, non-physician employees, independent contractors, students, volunteers (including mid-level providers) and employed or contracted physicians by endorsement are also included as insureds and receive key benefits, such as:

  • Waiver of retention available for outpatient mental healthcare practices following exemplary risk management standards
  • Billing and regulatory errors sublimit
  • Sexual abuse and misconduct sublimit
  • HIPAA liability sublimit
  • Reported incident trigger of coverage
  • Affirmative coverage for remote therapy services
  • Duty to defend

The Hiscox PRO Outpatient Mental Healthcare Professional Liability offering can be combined with other insurance products — including General Liability, Technology E&O as well as Crime and Privacy — to create bespoke packages of coverage to fit an individual business’s needs.

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NORCAL Mutual Begins Offering Medical Professional Liability Insurance Options to New Mexico Physicians

NORCAL Mutual Insurance Co. is now offering medical professional liability insurance coverage to the healthcare providers of New Mexico. This marks the 40th state in which NORCAL operates, including the District of Columbia.

“We are excited to extend our coverage to the medical community in New Mexico,” said Ron Rumin, NORCAL’s chief operating officer. “Our policy has been crafted to meet the needs of today’s ever-changing medical landscape, particularly as technology and data become a more integral part of the practice of medicine. NORCAL offers robust information and network security coverage included with each policy.”

NORCAL also offers two policy type options in New Mexico — claims made and occurrence— to better serve the differing needs of each medical practice.

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KaMMCO Admitted to Connecticut Insurance Market

KaMMCO announced today that it has been admitted to sell medical professional liability insurance and cyber security insurance in the Connecticut.

As a member-directed insurance and healthcare technology company, KaMMCO is rated “A-” (Excellent) by A.M. Best.

“The KaMMCO underwriting discipline and financial strength, combined with our pledge to provide members with superior claims protection offers healthcare professionals a truly unique medical professional liability insurance option,” said Kurt Scott, president and chief executive officer of KaMMCO.

KaMMCO is entering the Connecticut market with support from the Connecticut State Medical Society (CSMS).

“We are proud to work with the Connecticut State Medical Society to grow our insurance business,” said Scott, “and we are honored they recognize us as their medical professional liability insurance Preferred Affinity Partner.”

“We are excited to add KaMMCO as a proven insurance option for liability insurance and especially cyber security insurance for our members,” said Matthew Katz, executive vice president and chief executive officer of CSMS. “KaMMCO is a partner we know we can count on.”

Katz added that the cyber security insurance is extremely important to CSMS members following recent identity theft incidents.

KaMMCO began the licensing process in early 2017, receiving notification from the Connecticut Insurance Department on February 23.

“In working closely with the Connecticut State Medical Society on the development and launch of CTHealthLink, the physician-led health information exchange, it became clear that there was an opportunity to further serve the physicians and healthcare providers of Connecticut with valuable insurance products,” Scott added.

KaMMCO will be working with the organization’s brokerage firm, CSMS Insurance Agency, and anticipates quoting coverage later this spring.

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NORCAL Mutual Begins Offering Medical Professional Liability Insurance Options to New Mexico Physicians

NORCAL Mutual Insurance Co. now offers medical professional liability insurance coverage to the healthcare providers of New Mexico. This is the 40th state in which NORCAL operates, including the District of Columbia.

“We are excited to extend our coverage to the medical community in New Mexico,” said Ron Rumin NORCAL’s chief operating officer. “Our policy has been crafted to meet the needs of today’s ever-changing medical landscape, particularly as technology and data become a more integral part of the practice of medicine. NORCAL offers robust information and network security coverage included with each policy.”

NORCAL also offers two policy type options in New Mexico — claims made and occurrence— to better serve the differing needs of each medical practice.

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Michelle M. Ursini Appointed Director of Marketing and Business Development at CMIC Group

CMIC, a medical professional liability insurance company, is pleased to announce that Michelle M. Ursini of Wethersfield, Conn., previously a senior underwriter with the company, has been promoted to director of marketing and business development.

Ursini has more than a decade of experience in the professional liability insurance industry. Before joining CMIC Group in 2016, she worked directly for a brokerage firm, overseeing key accounts and working closely with the firm’s clients. Prior to that, she spent several years as the underwriting manager for Oceanus Insurance Co. In addition to her underwriting duties, Ursini also served as a liaison to the insurance carrier’s broker partners, as well as the company’s physician insureds.

“Shelly’s in-depth knowledge of underwriting practices and expertise in territory expansion will not only enable us to continue to grow our membership, but to accomplish many of the Company’s strategic goals as well,” said Stephen J. Gallant, chief executive officer of CMIC Group. “Likewise, her extensive experience collaborating with brokers will prove to be an asset as we expand our geographic presence as well as strengthen our bonds with our current broker partners.”

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