Captive insurance companies offer a unique alternative to traditional relationships with commercial insurance companies.
Policyholders with access to a captive are able to have an opportunity to share risks and enjoy rewards derived for improved claims experience. PRI’s Bermuda-based captive, Futuro Insurance Company, Ltd., was established to afford a turn-key, cost efficient, vehicle to facilitate risk sharing with PRI policyholders.
Participating physicians or healthcare providers will receive a non-assessable admitted PRI policy reinsured in part by a legally segregated “cell” of Futuro, a Bermuda-based captive in which they have an ownership stake.
PRI will continue to provide comprehensive services and claims support to participating policyholders in the usual and customary manner.
Through sharing risk, a physician group’s professional liability premium, loss results and net cost of insurance will become aligned. In addition, income from the investments of the physicians’ funds, structured to preserve principal and deliver a competitive rate of return, will be earmarked for their own benefit.
Healthcare providers can select from a variety of options for risk sharing, including quota share or excess of loss reinsurance arrangements. Premium will be allocated to correlate with the amount of risk assumed by each of the parties.
Dividends commensurate with historical loss performance can be declared and paid on a cell by cell (or policyholder by policyholder) basis, or alternatively surplus can be reinvested, sometimes on a tax-advantaged basis.
A physician group practice, representing approximately 100 physicians and total annual premium of about $1 million will constitute a minimum threshold to comprise forming a separate subdivision of a captive Futuro cell. Alternatively, a hospital could participate together with its employed or voluntary medical staff physicians in a similar risk-sharing relationship with PRI. The practice entity or hospital would be the ultimate bearer of the portion of risk assumed from PRI and reinsured through the captive Futuro cell.
Profits generally will take at least three to five years to be ascertained and realized.
Premiums paid will be tax deductible as long as a significant amount of risks of unrelated parties or, alternatively, risks of other affiliated entities, was placed in the risk pool (i.e., the Futuro cell).
Participants will have representation at PRI’s claims committee meetings and would make input into decisions concerning the selection of defense counsel.
Specialized risk management and loss control reports will be prepared by PRI on an ongoing basis.
All billing and collection of premium from participating policyholders will be PRI’s responsibility.
Physicians’ Reciprocal Insurers is the second largest medical malpractice carrier in the State of New York and is in the top ten in the United States measured by gross premiums.
PRI has offices on Long Island and Rochester, New York.