Are You Exposed if Your Insurer Becomes Insolvent?
As you’ve heard in the mainstream press earlier this fall (like this article in The New York Times from September 2015), the health insurance co-op Health Republic Insurance of New York is shutting down due to financial insolvency. More recently, broad media coverage has focused on the rush for Health Republic’s members to find new coverage.
But it’s not just about avoiding gaps in coverage for members. It also raises questions about payment of claims for members and reimbursements for physicians and hospitals who’ve accepted the insurance. As Crain’s New York Business pointed out this week in Health Pulse, its daily subscriber-only newsletter, the situation has caused providers to request protections from insolvencies like this one. Right now, health insurers like Health Republic do not have insolvency protection in New York State. The result is potential service disruption and financial loss.
It illustrates the importance of insolvency protection for all insurers (professional liability companies included). Policyholders should check to see if their insurer is covered by state guaranty funds, like MLMIC is in New York. Risk retention groups (RRGs) may not be covered.
In addition, policyholders should periodically check the financial condition of their insurers: Do the company’s assets exceed its liabilities per the latest financial statements? Insurer websites often carry these annual reports or quarterly financial statements. For example, you can find MLMIC’s annual reports here, and MLMIC’s latest financial statement (September 30, 2015) shows that assets of $5.9 billion exceed liabilities of $4.1 billion for a policyholders’ surplus of $1.8 billion.
Other important questions you should be asking about your professional liability insurance can be found here.