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Malpractice Insurance

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SVMIC has provided malpractice coverage for most HPI member physicians for many years. They are an excellent company that has served the community well. HPI has worked with them for years trying to negotiate premium reductions reflecting our members’ much better performance than the rest of SVMIC’s book of business. Although this year they offered some option’s to reduce premiums for HPI members, none were both appealing and feasible.

HPI working with Nexo Insurance Services, an insurance brokerage firm, has created an additional Medical Malpractice Insurance option for our members to evaluate on an individual practice basis. The option is through Lexington which has large and growing independent financial reserves that cannot be accessed by Chartis Insurance Group, the parent company. Chartis is one of the world’s largest insurer and had a combined statutory surplus of $38 billion in 2009. Lexington is establishing service levels comparable to SVMIC with increased flexibility in the selection of local counsel. This alternative offers significant up-front rate reductions and an outstanding profit sharing plan. Beyond the financial advantages, it includes important coverage additions (e.g., free entity and commercial liability insurance). Tail coverage is structured properly. Most members will gain a significant premium discount compared to their current policies. Under the retrospective rating plan, premiums will be pooled with underwriting profits returned to participating members. The maximum available refund is 50% of the premium paid by each physician.

HPI is establishing a Risk Management Committee (RMC) to enhance the profit sharing opportunity. We will have total access to loss information. Each quarter HPI and those members who have incurred claims will meet with the insurance company to review open claims and discuss the insurers strategy for resolving each claim at the lowest cost and as promptly as practical. No claims will be settled without the involved physician’s approval. Any profits refunded to HPI under the agreement with Nexo Insurance Services for the Lexington malpractice insurance option will be distributed to HPI members consistent with the following formula:

  1. 10% of profit returned by Lexington will be retained by HPI to help defray its start-up and operational costs
  2. The remaining 90% profit will be distributed to practices participating in the Lexington malpractice risk pool that helped achieve the profits equivalent to their pro-rata share of their contribution to the profits.

Seven HPI physician practices totaling more than 125 providers have already switched to this option and premiums now exceed $1 million annually. Premium discounts are averaging in excess of 25%.

If you would like to explore the merits of this alternative malpractice option including receiving a detailed premium quote for your practice, please contact Brant Kelch directly at 423-392-1920 or Tracy Gray at 423-844-4173. Quotes for other insurer products including E&O, D&O, property, workers comp and others are also available from Nexo.