Gulfstream Risk Advisors has successfully placed a uniquely structured reinsurance programme for a Vermont-domiciled risk retention group (RRG).
The programme, which is effective 1 July, covers the RRG’s excess losses on medical professional liability policies.
The RRG, formed in Vermont over a decade ago to write medical professional liability coverage, mainly writes business in a single state, with some risks written in adjacent states where cross-border care is provided by the RRG’s insured members.
The legislature in which the RRG operates has been systematically raising the Patient Compensation Fund cap, which caps medical malpractice claims by providing claimants with indemnification from a state-run fund in lieu of the care provider’s entire insurance limits.
The raise has meant reinsurance protection has become more necessary for the RRG’s on-going operations.
The crafted reinsurance programme spreads the losses over a multi-year period to create a smoothing effect and protect the company with concrete backstop should the RRG incur losses in excess of the PCF.
The RRG pays a deposit premium to the reinsurer for the coverage and maintains control over which claims they cede and which they don’t, and the amount of loss they cede determines their ultimate reinsurance costs.
According to William Hodson, Gulfstream’s managing member, the multi-year spread coverage was placed with the advanced solutions team of one of the world’s largest Europe-based reinsurers.
Hodson commented: “The coverage provides a very creative and cost-effective way for the RRG to protect themselves with a solid reinsurance programme, despite the RRG being on the smaller end of the spectrum than most large treaty reinsurers are used to supporting.”
“It really does pay to partner with professionals who know the unique needs and challenges of captives and RRGs, and can creatively solve those needs by focused advocacy and market-awareness to partner the right reinsurer with the right client.”
