Advice on RRGs

Dear PRI Member:

Over the last year or so, there have been a number of out-of-state risk retention groups (RRGs) soliciting business in New York. As we have done in the past, we would like to point out some important issues you should be aware of if you are considering insurance through an RRG.

Hidden Costs, Increased Risk

While RRGs tout their affordability, there are significant differences between RRGs and state-licensed insurers like PRI. The resulting financial and operational costs and related risks quickly outweigh any minimal savings:

  • Most important, RRGs are not regulated by New York State and are not covered by the State’s guarantee fund. PRI can access this fund, which protects our members’ obligation up to $1 million per claim, in the event of insolvency.
  • State-licensed insurers can also offer excess coverage once you purchase primary coverage, at no additional cost to you. Many RRGs do not have access to this excess coverage provided by the State.
  • Some hospitals in New York State do not grant staff privileges if you insure with a non-licensed insurer like an RRG. This is particularly the case if there are coverage gaps or shortfalls, or if you are not eligible to receive the excess layer of coverage.
  • Non-regulated insurance companies —including RRGs— require a capital contribution in order to underwrite your business. This is an extra cost borne by you that regulated insurers like PRI do not charge.

The Benefits of Membership

PRI’s policies offer our members a number of benefits that cannot be obtained through RRGs. These include a consent option, limits of liability that apply to each person rather than each occurrence, an aggregate policy limit that renews each year on tail endorsements, and defense costs that do not reduce the limits of liability.

PRI also provides —at no additional premium— $25,000 legal defense cost for actions brought against our members by a government body such as the Office of Professional Misconduct, arising out of allegations which could form the basis of a claim for legal liability under the policy. In these cases, PRI offers joint defense discounts for those doctors who are affiliated with a PRI-insured hospital or those belonging to the MagnaCare network.

PRI was founded in 1982 and our focus on New York State physicians and institutions has never wavered. Despite turbulent times, PRI has been providing New York doctors the most comprehensive protection and service available through its experienced claims handling and selective underwriting.

Should you or your colleagues have any questions regarding this letter or any issues regarding RRGs, PRI’s services or your coverage please call us at 1 800 632-6040 and ask for Chris Curcio, Director of Marketing.

Best Regards,

Gerald Dolman, Esq.
President
Administrators for the Professions, Inc.
Attorney-in-fact for
Physicians’ Reciprocal Insurers