Q. How does the insurance application process proceed, and who is responsible for making underwriting and policy pricing decisions for EMPAC RRG?
A. Naturally, groups interested in joining EMPAC RRG must fill out both a group application as well as individual physician applications. However, applicants will notice that EMPAC RRG’s applications seek information that reflects the EM physician oversight of the underwriting process. EMPAC RRG is not just seeking evidence of good training and to learn of your claims history, but rather wants insight into the quality of patient safety that exists in your department and what progressive steps have been introduced to improve and continue to improve the risk management aspect of the practice.
Along with gathering this data, the EMPAC RRG underwriting team, which includes physician members, will visit applicant groups as part of pre-underwriting to gain further awareness of the applicant’s risk control status. A written report will be generated from this visit and incorporated into the underwriting decision and this report will be shared with the applicant.
Should the applicant be offered membership in EMPAC RRG and accept that offer, this pre-underwriting report will service as the foundation for EMPAC RRG’s future annual visits in cooperation with the insured group’s continuing effort to improve patient safety.
Q. What factors are considered in the underwriting process?
A. Supplementing the traditional underwriting factors such as location and historical loss experience EMPAC RRG recognizes that emergency medicine residency training and risk management programs often contribute to the highest quality of emergency departments and therefore top consideration will be given to emergency departments with ABEM or AOBEM board certified physicians.
Q. How are premiums determined?
A. Premiums are calculated based on the actuarially developed rates, which are applied to the exposure base of the proposed insured. Since a RRG is built as a long-term solution to costs and stability issues experienced in the commercial market, EMPAC RRG’s rates must be expertly calculated on a conservative basis. In the medical professional liability industry, the actuarial firm Milliman is preeminent and does work for many medical professional liability insurers around the country. The physician leaders of EMPAC RRG have directed Milliman to conservatively determine the rates EMPAC RRG must require to provide strong long term security to its members. Milliman has studied industry wide experience to help EMPAC RRG set its state by state rates.
In the future as EMPAC RRG experiences claims and sets reserves with the assistance of Proclaim America, Inc. and the EMPAC RRG claims committee, Milliman will study the adequacy of the RRG’s own experience and incorporate this data into future rates. With the stringent underwriting of applicants, EMPAC RRG anticipates that ultimately its own our experience will be better than the general insurance marketplace and the RRG’s results will support rates that are superior to those offered by other insurers.
Premiums of course must capture the cost of managing an insurance operation and EMPAC RRG’s physician leaders are determined to maintain a “cost of doing business” that is below the traditional “expense load factors” seen in the industry.
Q. Do all members receive the same rate or are there considerations made for other underwriting criteria?
A. All rates are calculated based upon Milliman’s actuarial rate studies for each individual state and for rating territories within a state. EMPAC RRG’s physician leaders hope to provide better than average rates to all its members. Considerations are made for underwriting criteria such as individual exposures, historical results, and quality of the facility’s current patient safety program and the insureds willingness to join EMPAC RRG in working towards continually striving to improve in this area.
Q. Will program profits ever be used to reduce future premiums?
A. Yes, as a member owned entity EMPAC RRG will have an intrinsic interest in returning profits to its member/owners. However, the short term goal is to provide security to members by maintaining financial stability. It will take a few years for the program to develop its own creditable loss history and for rates to be developed based solely on EMPAC RRG’s own experience. It is vital to the success of EMPAC RRG that its member/owners maintain a long term view of success for the company. Obviously, the primary goal of creating EMPAC RRG is to effect financial benefits to members via stable rates and eventually through dividend payments or perhaps even return of surplus.
Q. Will members be required to meet underwriting criteria annually?
A. Yes. Although members will not be required to resubmit any pre-underwriting paperwork, they will be reviewed for loss experiences and any changes in exposures, year’s loss issues as well as their participation in the RRG’s joint patient safety improvement program.