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Q: What separates FWMSC from the countless other doctor-owned medical malpractice insurance companies who have come and gone over the past ten years?
A:
FWMSC’s objective is to be an available and affordable market for physicians. Many doctor-owned firms have been started with a lack of capital, a lack of medical malpractice expertise and premium rates that were inadequate in an effort to save doctors money at the start of the program.
FWMSC has taken the following actions to provide it with a better chance of ultimate success:
1. FWMSC believes it is adequately capitalizing the start-up through the stock purchase requirement. Each policyholder will be required to purchase stock in an amount tied to the anticipated risk of their practice.
2. FWMSC has hired experienced medical malpractice advisors (Aon Risk Managers, an international Risk Management Insurance Broker) to assist in the start-up and ongoing operations. Aon’s Indianapolis office managed seven RRG’s/Captives in Indiana and over fifty nationwide, the largest RRG Manager in the country. Aon Actuarial Services, Minneapolis, uses actual ten year claims history to set the rates at the 75th percentile of expectancy further assuring adequate protection to both physicians and investors.
3. FWMSC is not setting its rates artificially low to save the doctors money. Rather, rates have been set at an actuarially-supported level and will be actuarially set in the future based on the company’s loss experience. So doctors should not plan to see any savings in premium dollars spent in the near term. Rather, with control of our own destiny through claims management and adoption of a risk management education program to help our doctors protect themselves against the risk of claims, FWMSC hopes to develop an attractive return to its shareholders through savings in losses ultimately paid versus the estimates made in setting the rates. Doctors need to take a long-term perspective, as it will take a number of years before the ultimate losses from any individual year are truly known.
It should be noted the company does have further protection and this is the Indiana Patient’s Compensation Fund. The Fund prevents the company from having runaway verdicts impair its operations.
Q: Do all doctors in a group have to have the same policy form (claims-made or occurrence) or can there be a mix of policy forms?
A:
No, each physician within a group can opt for the type of coverage they prefer. Costs and savings vary by type of policy selected, and the group may choose how to allocate the higher cost of occurrence policies. The group corporate policy will match what the majority of the group has chosen.
Q: We have claims made policies now, would the conversion to a new carrier be cost prohibitive?
A:
No, FWMSC is able to offer new groups making the conversion a very cost effective quote on the purchase of the tail coverage necessary to insure the prior dates of services. In most instances, with normal underwriting standards applied, the cost of the tail and the cost of the new claims made policy from FWMSC will be less than what the group is now paying for “mature” claims made policy.
Q: Why does a Doc in any given specialty buy more units of stock than another?
A:
The State of Indiana Department of Insurance specifies a classification of physician specialty degree of risk. Aon Risk Managers, Inc., the actuaries who constructed the capitalization plan, used those risk classes to structure the amount of capital that a specialty physician would need to pay.
Q: What will a Shareholder get back if they leave for a reason other than Death, Disability or Retirement?
A:
Each year external CPA auditors value the Company based on its net assets. This value is used to compute the repurchase amount paid to a former shareholder. If a Shareholder stops being insured for any reason they have to sell their shares back to the company. If the reason for discontinuation is death, disability or retirement then they get 100% back within 60 days. If they are no longer insured due to excessive loss experience or fraud, then they get nothing back. For any other reason they will receive 85% of the value paid over twenty (20) equal quarterly installments beginning 60 days after cessation of insurance.
Q: How are the Premiums Computed?
A:
Aon Risk Managers professional actuarial division designed the premium structure for each of the risk classes. This was done based on their knowledge of the State of Indiana loss experience and by studying the ten year actual claims experience of the insured’s. Any particular physician will have credits and debits applied based on better than average and worse than average claims experience to arrive at the final premium off the base premium.
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