Over the last several years, health care providers, including hospitals, health maintenance organizations, physicians, and physician groups, have experienced increased medical professional insurance costs. As a result, many have sought alternatives to the insurance policies and services offered by traditional insurance carriers. A popular alternative is a captive insurance company (or “captive”).
A captive is an insurance company formed by a business owner to cover the insurance risks of the business. Like any business, a health care provider can form a captive to cover its insurance risks, including medical professional liability (or “MPL”). A captive gives a health care provider greater control over its insurance needs and allows it to reduce premiums paid to traditional insurance carriers.
The challenge for a health care provider seeking to use a captive is the inherently unpredictable nature of risk. It is nearly impossible to predict when a medical malpractice lawsuit will be filed. In addition, the damages could be catastrophic. As a result, a captive providing MPL insurance may need the help of the traditional insurance market to mitigate its exposure. This is done through reinsurance.
In a reinsurance arrangement, an insurance company obtains insurance from another insurance company to cover some of the risk. Reinsurance enables an insurance company to take on greater risk, because some of its risk is transferred to the reinsurance company. This protects the insurance company from a catastrophic claim. Almost all insurance companies are involved in reinsurance arrangements. A captive, especially one offering MPL insurance, should also use reinsurance. The problem is that a captive cannot always gain access to the reinsurance market, and, when it can, the premiums are often prohibitively expensive.
RMC Group has developed a “turn-key” reinsurance program that enables MPL captives to participate in the MPL reinsurance market. The program provides MPL captives with a quick, efficient, and cost-effective solution to their MPL risk management needs.
Backed by AM Best “A-” or better rated carriers, RMC Group’s reinsurance program provides access to the MPL reinsurance market at competitive rates. The RMC Group MPL reinsurance program offers equitable and affordable terms and conditions for captives with $250,000 to $30 million of annual MPL premiums.
For more information on this reinsurance program, contact your regional representative or RMC’s headquarters at 888.599.5553.