2. CustomerCommitment
"$orInorsmann
ssntury,us'us
[ssnhsreIsr
sny$isianunn$
dentist$,tnd
u$'rsgommittsd
t0s0nliniling
tltst$sr[is$."
Our mission statement saysit in a nut-
shell: MedPro exists
"to
provide profes
sional protection and excellent service
to health care professionals through a
dedicated team of industry experts."
National presence"localtouch
Our customer service representatives,
market managers and claims profes-
sionals are located acrossthe country,
keeping them in tune with regional
concerns, state issuesand community
developments. They know their terri-
tory and they know the best legal
minds within that territory. MedPro
hires the most experienced defense
attorneys from
its panel of top
law firms 9o,ooo
thro ugh ou t eo,ooo
the country to 70,000
defend our 60,000
policyholders 50,000
against claims 40,000
of malpractice. 3o,ooo
20,000
Our regional t0,oo.,
experts and .,
local attorneys
work side-by-
side with you, backed bY MedPro's
nationwide strength and dePth of
experience, to provide the best health
care defense in the industry.
Dedicatedto health care
professionals
The St. Paul Companies, once the
largest malpractice carrier in the
United States, announced in
December 2001 that it would no
longer offer coverage to doctors.
';t:llal:a:a:.-aa.:::,aa:::.:.4::.: ..
PHICO and Frontier Insurance Group
have also left the medical malpractice
market. MIIX pulled out of every state
but New Jersey. Doctors Insurance
Reciprocal stopped writing grouP sPe-
cialty coverage at the beginning of
2002. The field is narrowing, and
insurers are leaving.
But not MedPro.
We continue to stand strong and
remain committed to our policyhold-
ers. In fact, we've grown even stronger.
As malpractice experts have become
displaced by the failure of their former
85,000
and
growing
e m p l o y e r s ,
the best of
those experts
have found a
new home at
M e d P r o .
Their knowl-
edge adds to
our strength,
which bol-
sters your
protection.
200r 2002
Undenvriti ng excellence
Our growing presence in the midst of
an industry crisis isn't the result of
luck. It's due to the high underwriting
standards we've develoPed over the
past century. Our underwriting team
works diligently to ensure that MedPro
covers only the risks it knows best
among physicians and dentists fiom
acrossthe country Our exacting stan-
dards ensure that we will continue to
stand out as the industrY's Premier
3. provider of medical malpractice insur-
ance...and continue to offer services
you can depend on asother carriersfall
in retreat.
elaims handlingexpertise
For more than a century the core of
MedPro has been our claims handling
expertise. We believethis is one of the
important factors that differentiatesus
from our competitors. Our ability to
handle claims through to successful
resolution is one of the main reasons
health care professionals choose
MedPro. A recent survey revealed a
99% satisfaction rating from our
clients. We're proud that our policy-
holders think we are doing a good job.
Ww#,ffi;Wtr:$;#
fl;r;wxw;wwr*wx&
. Aset strength of over $1.7 billion;
Exceptional financial strength,
which bolstersour ability to protect
you;
. ..:.... ...:'4.,,1,,j,:t,:4.:la-:::,,:),:a,:,:ara,ta*'
Strength ts weather the stsrm
There is a reason why nearly 85,000
physicians,dentists and their corpora-
tions have chosen MedPro to protect
their reputations and assets. In fact,
there are many reasons. Here arejust a
few that show why we have the where-
withal to stand by our policyholders:
rrffiw;w
ffi#;ffi#rff;#*%f
. More than $400
holder surplus
claims;
million in policy-
available to pay
a6$8ftsffig#s#rwffi#sft#
ffiwfl;g;wffiy;ffirg
rdwdffiwreff;#;wjff;ww
WordofmouthhasbeenTomsbestsellingtool.
"When
doctorssee
thevaluetheygetwithMedPro,"hesays,
"they
tellotherdoctors
aboutit."
Theymustlikeit. 0verall,theSheridanGrouphasa 93%client
retentionrate.
"ClientspreferMedProspolicybecauseit'sclean
anddoesn'trequirealawdegreetounderstand,"Tomnotes.
TheSheridanGroupalsomarketsproductsinmoretraditionalways:
directmailingflier,comparisonsheets,attendingmedicalandden-
talconventions,advertising,anddirectingpotentialclientstothe
Internet,wheretheycanfilloutapplicationsonline.
"lts
convenientforthedoctors,"hesays,
"because
its instanta-
neousandtheydon'thavetomailanythingbacktous.Anditsgood
forus,too,becausewedont havet0trytoreadtheirhandwriting,"
helaughs.
Sr*perisrCust*ms Relatisrrsff*vugh VnlaedPurtnerxhips
As a hometo employeesof NASAsJohnsonSpaceCentet
Friendswood,Texas,isa baseforhumanitysreachforthestars.
AndasthehomeofTheSheridanGroup,it'soneofthebasesfor
MedProsreachforcustomersthroughoutTexas.
TomSheridanSr.foundedhisindependentagencyin1986.From
thebeginning,hespecializedinmedicalmalpracticeinsuranceand,
in1992,begana profitablerelationshipwithhiscarrierofchoice,
MedPro.Today,MedProisTomsfirstchoice,forhisagencys$60
millionbook.
"And
we'dliketogivethemevenmore,"hesays.
Why?
"MedPro
hassuperiorA.M.Bestratingsandrocksolid
finances,"Tomnotes.
"And
theyretainonlythebestlawfirms,
whichiscriticalforourclients."
Alsoimportantisthecommitmenttohisstate.
"A
lotofmalprac-
ticecarriershavethrowninthetowelandleftTexas,"hesays,
"but
MedProsdoorsremainedopenwhenTexasdoctorsneededthem
mostandmetthechallenge."
4. . Highest ratings in the industrY;
. Part of the strong, $2.4 billion diver-
sified porfolio of GE Commercial
Insurance.
Ourcommitmentto you
We continue to grow-in a disciplined
manner to maintain financial
strength. We continue to innovate-
in a creative manner to Provide You
with more services. We continue to
protect-in a manner that wins in the
courtroom. For more than a century
we've been here for health care profes-
RJ0t0Gl,"
'TlGGontittueto
slou,
lilsconlinmlo
innoufllo.
WoGontinuGlo NationalPresence,LocalTouch
sionals, and we're committed to con-
tinuing that proud service. We've
dedicated ourselves to providing
"P.o-
fessional protection and excellent
service to health care professionals."
Our record speaksto our successin ful-
filling that mission. Our dedication,
our expertise and our financial
strength will help us make good on our
promise to continue to serve and
defend you into the 2lst century.
That's our commitrnent to You.
I Sales,CustomerService,IndependentAgent,Broker,andClaimsLocations
5. FinancialStrength
-'llmrftrlnnr*n*
$r&[lstl*ts
rs{lss*sdIrx
ultx*sklnrntlrlgx
frmnrlrk*ins*tr-
6n*&Xm$xx&r$s
mrer*t**rrmffit*s
ssrwfisss."
FinancialStrength
At a time when the average medical
malpractic. jrry award has risen to
$3.5 million and many insurance com-
panies are exiting the business, it's
important to know that your medical
malpractice insurer is secure' finan-
cially strong and in the business for
the long run.
Like MedPro.
A wealth of experience
As the nation's first provider of med-
ical professional liability insurance,
MedPro has been protecting the assets
and reputations of physicians,dentists
and other primary providers of health
care for over 100 years. Today nearly
85,000physicians, dentists and hed'lth
care professionals and their corpora-
tions rely on the financial strength,
innovative products and services,and
claims handling expertise offered by
MedPro.
Leadingfinancialratings
MedPro is on solid financial footing
with assetsof over $1.7billion and cap-
ital and surplus of over $400 million
available to Pay policyholder claims'
Our financial strength is reflected in
enviable ratings from the insurance
industry's premier ratings services:
. A.M. Best gives MedPro an A+
(Superior) for suPerior financial
strength, oPerating Performance
and market Profile.
In describing our merits, the rating
agency says,
"Based on Medical
Protective'sgood geographic spread
of risk and historical earnings track
record, A.M. Best exPects that the
company will continue to post favor-
able operating results...
"
. Standard" & Poor's-which recog-
nized MedPro as its highest rated
admitted Primary medical Profes-
sional liability insurer-gives us an
AA- (Very Strong).
S&P exPlains that the rating
"reflects a leading competitive mar-
ket position, effective distribution,
[and] extremely strong capitaliza-
tion..." The rating servicepoints
out that MedPro's
"focus since its
inception has been to Provide con-
sistent coverage and quality service
...atareasonable cost. [It] has suc-
cessfullyachieved this goal'"
Partof a strongfamilY
MedPro's financial fortitude isbolstered
by the strength of the GE Commercial
The
Assets
Liabilities
CapitalandSurPlus
Grossprcmiumswritten
PolicyholderCount
MedicalProtectiveGomPanY
Statutory FinancialData
t000'sl
2ffi2 2001 am
$ $ $
1,747,486
1,345,760
4A1,726
586,464
84,517
1,383,973
975,758
408,215
380,169
76,839
1,275,232
902,461
372,771
296,817
71,476
6. Insurance family of companies,which
wrote $2.4 billion in net premium in
2002.GE Commercial Insurance is one
of the largest commercial lines insurers
in the country and a member of
General Electric-"the world's most
respected Company" (1999-2003)
according to TheFinancial Timps.
A winning combination
Arr unparalleled history of medical
malpractice experience and commit-
ment. Impressiveassets.Dependable
capital and surplus. Top industry rat-
ings. Part of a diversified, highly+ated
portfolio of commercial insurance
companies.
MedPro has it all.
A+
(Superior)
.' . . l. -'.'r:.:1...r',:r't:::,r:iliL:::.lt:.ir]:i!.iti,t:.,.:ll.i::,
Med MlalearrierKatings
Source:AM BestRatings,wrywvAMBestcom 0nlineratingsasofApril30,2003
B o r
Below
= 4 > O O U O O
= = E * * = = = E E
. q 3 " u = q < a ? @
: - Q > - ^ =
a z E
b
E
furing,agenriesR*po"d to Crisis
AlreadyreelingfromtheterroristattacksofSept.11,2001,corporate
accountingscandalsandbankruptcies,insuranceratingagencyA.M.
Bestnoted,
"
..thetrueimpactwillberealizedthroughtheexpected
increasesinfrequencyandseverityofprofessionalliabilityclaims."
Inresponse,thetopratingagencies,AM BestandStandard&
Poors,havetightenedtheirguidelinesformeasuringthestrengthof
insurers.concernedthatinsurershavetheassetsandreservest0
meettheirfinancialchallenges.
Theratingagencieshaveespeciallystiffenedtheirstandardsformal-
practiceinsurers.
"The
medicalmalpracticemarket,"writesA.M.Best,
"experienced
a
highpercentageofdowngrades,asrisingloss-costtrendscausedby
medicalcostinflation,rapidlyincreasingjuryawardsandthelack0f
tonreforminseveralstateswereallcontributingfactors."
MedPro,however,continuesto leadthemarketwithitsratings.
AccordingtoStandard& Poors,MedPro
"remains
thehighestrated
admittedprimarymedicalprofessionalliabilitycanierdespiteachal-
lengingmarket."
InawardingMedProa AA-(VeryStronglrating,Standard& Poors
saidtheirratingreflectsMedPros
"marketpositionofindustry-lead-
ingfinancialstrength,a geographicallydiversifiedportfolio,and
superiorclaimspayingability."A.M.Bestsimilarlyawardedusthe
unparalleledA+(Superior)rating.
Weareextremelyproudof ourratings.Theyarea reassuring
endorsementofourunderlyingfinancialstrengthandourindustry
expertise.Moreandmorehealthcareprovidersarenotwillingto
trusttheirlivelihoodandreputationtoanyoneelse!
7. Industry'sBestDefense#&q*&i!!t:t:!ltn1i::.4::1.r,-::.::.: .:'.:l,i:
"0uJsilsngthis
yoursrGatG$t
allruhenWur
$olsssional
rcnuttti0fii$
mrsttGnGil."
You can't put a price tag on your pro-
fessional reputation. It's the corner-
stone of your practice, the foundation
of your financial future and the reason
people rely on Your care. AnYthing
that threatens your reputation is an
assault on your success,your career
and your very character. You can't
take it light$ We don't.
MedPro takes malpractice claims seri-
ously...we've handled more than
200,000of them.
We mount an earlY, aggressive
defense designed to protect your rep-
utation, dismiss any suggestion of
medical negligence and discourage
claims that have no merit' Our
clients appreciatethis approach' Our
record of vigorously defending iheir
professional integrity has earned us a
99% satisfaction rating in a recent
customer survey.
When we take a caseto trial, we go
to win. And we usuallYdo-92%
TrialSuccess/"l1Vin"Ratio
the time, which far exceeds the indus-
try average. When the facts of the case
are such that we and our policyholder
believe settlement is the only option,
we use our years of experience to drive
for a fair, rapid settlement.
Nationwide defensenetwork
No matter where You live and work, we
have a defense team nearby who can
come to your assistance. After more
than a century of exPerience, MedPro
has established an extensive nation-
wide defense network, building long-
standing relationships with more than
600 law firms specializing in defend-
ing medical malpractice cases' We've
carefully chosen these law firms based
on their:
. Previous claims experience;
. Established knowledge in a specific
field;
. Strong alignment with the medical
communitY;
t GEMedPro
r JVR
in
of
1997 1998 1993 2000 2001 2002
Source:TheMedicaIProtectiveCompanf'BeprintedwithpermissionfmmJuryVerdictBesearch''.
@2002bvLHppublications,zqz-D;rn.,Bd.,p0Box980,Horsham,PA19044.
Allrightsreserved
8. . Proven track record in successfully
defending health careprofessionals.
When you combine our national out-
look and years of experience with the
local legal expertise of your nearby
defenseteam, you can seewhy MedPro
has an unmatched record of court-
room success.
Financialresource$yeu need
On those occasions when going to
court is not appropriate, we seekyour
consent before authorizing any settle-
ment-. Historically, more than two-
thirds of our claims are resolvedwith-
out an indemnity payment. But in
those caseswhere a settlement Pay-
ment is necessary,you have the confi-
dence of knowing that MedPro's vast
::.,.,....:::::l',::.:.:::tta.l],f.rL:t!,;:ir'|::!!t{}]..lti.*!1.
financial strength gives us the ability
to pay on your behalf. And your poli-
cy, underwritten by The Medical
Protective Company, covers Your
defense costswithout decreasingyour
liabiliw limits.
The strength of MedPro-it gives us
the financial resourcesto Paywhen we
have to and to fight on your behalf
when we should. Our strength is your
greatest ally when your professional
reputation is threatened. It's the rea-
sonwe're able to provide the industry's
bestdefense.
All insuranceproducts are underwritten by The Medical Protective
Comoanv unless otherwise indrcated The Medtcal Protecttve
ComDanvis licensed tn all states and the Disttict of Columba
Product availability varies based upon business and regulatory
approval 'Medical Protectivecanoffet tndividualphysiciansandden
tists the right to written consent before settling a claim Contact
y#:i::tTi:::7"Xnd seeirvouareetisibtetoreceivethisimportant
ThiswasnewterritoryforDr.Sherd:
"They
taughtmehowt0act
incourt,howtodress,howtocomportmyself.I learnedthetrial
isashow,andthejuryisyouraudience."
Fortunately,attorneyMorganandMedProbackedupthat
"show"
withastrongcase.Dr.Sherdwon.
A weeklatelDr.Sherdwroteto MedPro:
"Thankyouforthe
opportunitytomaintainacleanrecord.lt meansagreatdealto
bevindicatedofmedicalnegligence."
AttorneyMorganisalsothankful:
"MedPro
suggestedwehave
medicalillustrationspreparedtoshowjurorswhatoccurreddur-
ingdelivery.Theseareexpensive,butMedProinsistedthey
wereworththemonev."
"The
totalbillforthetrialwas$70,000t0$80,000,butMedPro
refusedto do anythingthatwouldcompromlsethe doctor's
defense.Theystoodbytheirclientandwon."
Wnning Results
A difficultdelivervin October1999ledDr.lanSherdto a
MarylandcourtroominJanuary2003.lt washisfirstmalprac-
ticesuit,andhefeltunprepared.Fortunately,MedProwasthere
forhim.
AtissuewastheepisiotomyDr.Sherdperformed0nafirst-time
mother.Althoughtheepisiotomybecameenlargedduringthe
manipulationtofreethebabywhenit becamelodgedduring
labotDr.Sherdrepairedtheincisionwithinthestandardof
care.
Buttherepairlaterbrokedownandwasrepeatedlyfixed.The
motherblamedDr.Sherdforherrecurringpainandsphincter
problems.Shesuedfor$1million.
Dr.Sherdturnedto MedPro'sMarylandclaimsteam,who
believedthecasewasstrongenoughtowin.Theclaimsteam
hiredattorneyBobMorgant0mountthedefenseandprepareDr.
Sherdfortherigorsofcourtroomtestimony.
9. RiskManagementServices
"illgdProoffgrs
thgtoolsand
rc$0ilrcGsuou
needtot$$$$$
andmanflgs
ItoulJis[$."
Although MedPro offers the industry's
bestdefense if you should everbe taken
to court, no one really wants to go
through the discomfort of a malprac-
tice trial. It's much less stressful to
avoid a lawsuit than to defend yourself
against one. That's why MedPro has
been ofering the tools and resources
you need to avoid litigation since 1903.
Our risk management consultants
average more than 21 years of experi-
ence in the health care industry. Our
team works tirelessly to answer your
questions, offer guidance and provide
education, news and information.
Just look at the scope of the services
we provide...
HlPAAdvantagetakes the
confusion out of compliance
This year you're expected to be fully
compliant with
the security stan-
dards of the
H e a l t h
I n s u r a n c e
Portability and
Accountability
Act of 1996
(HIPAA). The
Congressionally
mandated act
specifies the
administrative
responsibilities,
business-related
safeguards and
technology secu-
rity systems that
doctors and their staffs must have in
place to safeguard patient information.
Meeting the new privacy standands
means increased paperwork and pro
cedures, adding to your already grow-
ingworkload. Butyou don't have to go
it alone. MedPro can help with our
HlPAAdvantage Compliance Toolkiu
This comprehensive, easy-to-usePrG
gram streamlines and systematizes
your HIPAA privacy compliance efforts
by providing everything you need.
Consultingservices
How risk-conscious are your doctors
and your staffi How well do you com-
ply with regulatory standards and
guidelines?We can help you find out.
Our risk management consultants
offer a variety of risk-assessmentevalu-
ations for physicians and dentists.
. Medical consulting services: Our com-
prehensiveand focusedofrce practice
evaluationswill gauge your risk man-
agement procedures and offer advice
if improvement is needed.
. Dental consulting services: We offer
cooperative educational ventures
with many state and local dental
societies and provide risk analysis
research and support for the devel-
opment of performance imProve
ment and quality initiatives.
Riskassessmentacademy
Medical and dental knowledge
changes quickly, and staying current is
important to reduce your liability risks.
MedPro helps by offering continuing
education courses online or in class
room seminars-offering Continuing
Medical Education (CME) and
10. Continuing Dental Education
credits-that are scheduled at
sitesaround the country.
(cDE)
various
A eenturyof
TheFrateetor
Since 1903, MedPro
has provided cutting-
edge risk manage-
ment information
and quality updates
in the pages of The
Protector. This
highly regarded
newsletter offers
health care pro-
fessionals cur-
rent industry
i n f o r m a t i o n
and sensible
strategies for managing
and reducing medical and dental risks.
r..,, .' :',t,trr::'i:t::.'::,::il::.:,:.:..t1u.,i:'.:.::.,.:,i:-l.l!:
A eomprehenslvepaekage
Information, advice,assessments,tools
and technology-it's a comprehensive
packageof servicesdesigned to reduce
your risks and improve the likelihood
that you will stay out of
court. Let MedPro
concentrate on
your risks so you
can focus on more
important things-
like your patients.
wffiKetrffiffiffiffiffiffi
wffiK#ffiffiw*ffwwwxw
ffi$e*Kxffitrffi
#mmwwKffi$
Kffi$$&ffiffi-.
FollowingcarefulSixSigmapractices,theteamcollecteddataon
everypatientchartthatinvolvedadiagnostictestinatwo-week
period.Theyfoundthatnotallthedoctorswerefollowingthepro-
ceduresallthetime.Thedatapersuadedthedoctorsthatchanges
wereneeded,s0newproceduresweredeveloped,withdoctors
andnurseseachplayingrolesinsafeguardingpatientchartsand
makingsuretheywerecompletedandreturnedeachtimenew
informationwastobeadded.
Theimprovedprocedureswereimplementedandcarefullymoni-
toredduringatestperiod.Theresultingdatashowedadramatic
change:correctprocedureswerenowbeingconsistentlyfollowed
99%ofthetime.ltwasahugeimprovementfortheclinic,agreat
successfortheSixSigmateamandanencouragingindicationof
thekindofrisk-reductionimprovementsthatMedProsuseofSix
Sigmacanbringtoourclients.
'-Kffi&
ffiffiffiffitrffi
ffiffiffi&ffiweeKwffiKffiKe
X{rX*d"SOur CuswnrersSo4we&u*bems;Redrxeircg-n*&.."
SixSigmaisawayoflifeatMedPro.ltsamethodicalapproach
fordetecting,measuringandsolvingprocessissuesandprob-
lems.We'reusingthisapproachtoimproveourworkenvironment
andreduceoperatingcosts.We'realsobringingthebenefitsof
SixSigmatoourclientstoreducetheirriskofliabilityandthus
reducetheirpotentialforclaims.
Thefirstsuchproject,ataNorthCarolinaclinic,wasoverseenby
TheresaEssick,MedPro'sVicePresidentof ClinicalRisk
Management.Sheassembledateamoftheclinicsdoctorsand
keystaffmembers,aswellas MedProrepresentatives.They
zeroedinona keyconcernattheclinic:consistencyinhandling
patientchartsandtestresults,andmakingsurethatthosetest
resultsareproperlycommunicatedtopatients.
Thisisnopettyconcern.Evidenceofproperprocedurescansave
monevintheeventofalawsuit.
11. CustomerService
"lils'uGttnsn
manyslc$ in
iltcright
su$0mGr
$srucc
ilirectionin
tnGRASIystr""
In the time it will take you to read this
sentence-about four seconds-
MedPro will answerat leastone phone
call from one of its customers'
Four seconds. The time from the first
phone ring to a
"Hello" from one of
our customer service representatives'
It used to take far longer to accom-
plish the same thing-if you reached
a live person at all-so this is a big step
in the right direction'
We've taken many stePsin the right
customer servicedirection in the past
year. We've had to in order to keeP uP
with the big increase in customers'
About a Year ago' we were receiving
250 calls a day-now lve receive up to
1,000 calls a day' That's 240,000calls
a year. Even more imPortant to our
policyholders' we are now resolving
more of our customers' inquiries on
the first call.
KeepinguPwith the influx
Why all the calls?Morepolicyholders'
Asyou'll seeelsewherein this issueof
Average SPeed to Answer
ance carriers to abandon the field'
Those departures have left numerous
health care professionals looking for
malpractice coverage' Many of them
have wisely turned to MedPro'
Call Abandon Rates
Jan'03 Feb'03
For us to serve the large numbers of
good doctors looking for coverage, it
means a real operational challenge'
In the past few Yearswe have added
more than 20,000 new PolicYhold-
ers-an irlcrease of more than 30%'
Every customer is imPortant to us, so
we had to take a new aPProach'
A moresystematicaPProach
As the call volume Srew from 250 a
day to 1,000, we knew we needed a
more systematic aPProach for
responding to customers' Using our
effective Six Sigma tools for detecting'
measuring and solving problems, our
new Operations team is improving all
aspectsof our customer sen'ice opera-
tions. In April, call center hours were
extended from 7:00 am to 7:00 Pm to
accommodate all time zones in the
United States.
Continuingto improve
Our Customer Service Center and
online applications are just a start'
We're continuallY looking for new
2Yo
1o/o
Dec'02
CustomerNru.s,the current health care
crisis has prompted some major insur-
12. and better ways to respond to your
needs, to accelerate our response
time and to provide the kind of
industryJeading customer service
our policyholders have come to
expect from MedPro.
Doing so is at the heart of our missionto
"provide
professionalprotectionand excel-
Ient serviceto health careprofessionals."
We take that mission seriously.We won't
be satisfied,until we knowyou are.
Join theGEPrelerredDentalProviderNetwork!
As a leadinggroupdentalinsurer,GEGroupLifeAssuranceCompany
hastheDentalPPONetworkyouarelookingfor:
. Increaseyourpracticerevenue
. Receivetheserviceandsupportyouneed:
- 85%ofclaimsprocessedwithin5 businessdavs'
- 98%claimprocessingaccuracy'
. Simpleandfastenrollment
Sign-uptodaybycallingusat(8lXll451-2513andnotethat.you GEFinancial
wouldliketo enrollin our
"Dental
PPONetwork".lt'sthateasy! Eiii* s"ni"r,aroup
Irmmatiun - OnlineSffi)ires
Youhavepatientst0 see,proceduresto perform,healthcare
advancestokeepupwith Andyoualreadyhaveenoughpaper-
workinyourlife.Whyaddmore?
That'swhyMedPro,theIeaderin industryinnovationssince
1899,strivestomakeit easierforourpolicvholderstodobusi-
nesswithus.WeputthepoweroftheInternettoworkfordoc-
tors,offeringeasy,c0nvenientonlineservicesavailable24hours
a day,7daysa week.Forexample,policyholderscanobtaina
orintableCertificateofInsurancewheneverneeded.
Recently,welaunchedan0nlineapplicati0nforindividualdoc-
tors0rthosewhojoinagroupthatwecurrentlyinsure.Thanks
totheprocessimprovementsthatSixSigmahasdelivered,our
onlineapplicationshavesignificantlyreducedthetimeit takes
forustoprovidecoveragetoprospectiveclients-by80%.
GEMedicalProtective.comalsooffershelpfulAnswerandLegal
Centersthatdetailriskmanagementissuesandcaselawfor
yourspecificfieldandgeographicregion.Youcanevenassess
yourownrisksbytakingourquickonlinequizorourin-depth
Practice-BasedAssessment.
13. HealthCareCrisist::ta:.,::a::a.a'.,:1.|:,,",,::. .
Patientsreceivelessthan half
of verdict
Under the current tort system,lessthan
half of award and settlement dollars
compensate injured patients' Their
lawyersget the majority. In a settlement'
the injured patient averages only 57
centsfor everydollar the insurance com-
pany pays. If the casegoesto verdict, the
patient getsevenless-about 40 centson
the dollar*.
InvestmentYieldsaredeclining
The strong bond market in the 1990s
helped boost the profits of medical mal-
practice insurance carriers, so somefelt
comfortable writing policies at or below
what they expected to pay out in claims'
From 1994to 2001,medical malpractice
underwriting losses nearly doubled,
jumping from $4.5 billion to $8'6 bil-
Iion, while,premiums increased only 37o
a year,going from $4.7 billion to $5'6
billion. Carriers' investment income
also declined, about 2% a year during
that same periodu. As a result, since
1999the combination of earned premi-
um and investment income hasn't been
enough to offsetlosses.
One factor behind investment declines
was a drop in bond yields beginning in
the late
'90s. For examPle, l0-Year
Treasury notes yielded 7'81Voin 1994'
But by September 2O02,that yield had
slumped to 3.88%-less than half the
'94rate6. About 80%of acarrier's invest-
ments are in government, municiPal
and corporate bonds, so when bonds
take a hit, the insurer's investment port-
folio suffers'.
"1$$$tnmftnlf
olauardand
$$fficmsntSollar*
s0m$n$tl$
iniursd$tti$nt$.
ThnirInwusf$s$t
th$mtiilJit$,"
900
800
700
600
500
400
300
200
100
Numberof PaYrnentsOver$1MM
Source:NationalPractitionersDataBankPublicUseFiles
Why aremedical malpractice ratesrising
sorapidly? Is it the samein everystate?
What's the prognosis for the medical
malpractice insurance industry? Is the
market in critical condition? There are
a host of causesbehind the current situ-
ation and the confusion surrounding it'
We hope to help clarify what is happen-
ing in the industrY and at MedPro'
For nearly a decade, health care costs
rose considerably faster than the con-
sumerprice index (CPI)'. There wasa
turnaround in the mid-1990s,but it did-
n't last long. By 1999,costswere rising
againat ratesfar exceedingthe CPI' fu
these costs go uP, so do medical mal-
practice awards and settlements,which
arebasedon the expectedfuture costsof
patientcare.
Award sizesareincreasing
Compensation to injured patients has
risen alarmingly. During the past seven
years, the average
medical malPractice
jury award has risen
218%,from$1.1mil-
lion to $3.5million'.
This creates strong
upward pressure on
s e t t l e m e n t s .
Through the 1990s,
the frequencY of
indemnity Pa).rynents
greater than $l mil-
lion remained rela-
tively stable.But berween1999and 2002;
the number of caseswith an indemnity
payment over $l million more than
tripled3.
14. MedProstepsup...
Having weathered prwious crises in the
1970sand
'80s,
MedPro'sexperiencegrues*
an adr,antagrwe undentand the need to
kecp our costslow. As we described in
'lndustry's
Best Defense,"we work agres
sivelytowin in courtand topaythelowestset-
tlementswhen necessary.
We take this same aggressiveapproach
to our operations. In order to keep the
price of medical malpractice insurance
as low as possible, we have always
focused on keeping our internal costs
low. When we keep our costslow, more
of our policyholders' premium dollars
go to paying claims.
Our Position
We are working hard to addressthe challenges we are all facing as a result of the
health care crisis. We believe in a four-pronged approach to addressingthe health
care crisis-clinical risk management, regulatory scrutiny of carrier solvenry, tort
reform and adequacyof health carereimbursements.
Clinicalrisk managementand patient safety
As you can read in the
"Risk
Management Seryices"section, we have long believed
that
"an
ounce of prevention isworth a pound of cure.e'That's why we have invested
in risk management servicesfor 100years. If we can work with our policyholders to
understand and addresspotential risks in their practices,we can reduce their likeli-
hood of being sued. That's good for our policyholders and their patients-and its
good for MedPro too.
Regulatoryscrutinyof carriersolvency
Competitive pressuresand market expansionsin the early'90s prompted somecarri-
ers to make poor pricing decisions.Some insurers expanded awayfiom their tradi-
tional baseof primary physician malpractice coverageto enter new states,cover hos-
pitals and evenbranch out into reinsurance. To attract new business,many of these
carriers priced their products at irresponsiblylow levels.
ExpenseRatios
Source:A M BestShushunoff/ThomosonFinancialNetwork
Sources
1 Williamlv1Mercer:insuranceInf0rmationInstitute
2 JurylbrdictResearch;Insurancelnfo.mati0ninstitute
3 NiationaiPractiti0nersDataBankPublicUseFiles
4 Calculatedby6FMedicalPnrectivebased0n
ft,{ICRAdatafromCAPPoq
5 C0mputedbylnsurancelnt0rmati0ninstitutebased
onAMBestdata
6 10YearTreasuries:H15Release- FederalReserve
BoardofGovernors
7 BrownBrolhersHarriman& Co
8 HenrydeBraclon'sDeLegibuslc12481
I AMBest;Shushunotf,4hompsonFinancialNef/uork
15. "Th$trn$[stf
mh$ins
imRrougmsm$
ilslnltrsfurm*
atth$locallsusl,
ilriunnbYaUra$s'
r00tsinitiatius$'.,"
Then investment income started drop-
ping and lossesbegan rising' These
.ur.i.r, saw their lossesincrease dra-
matically, some PaYing out $1'50 to
$2.00 or more for every dollar of premi-
um they wrote.e When these carriers
began experiencing huge losses and
somefailed or exited the market, physi
ciansbegan to seepremiums skyrocket'
We believe that if they focused on the
solvency of these carriers, regulators
could have intervened before the carri-
ersfailed.
Tortreform
While we believe in patient safety and
greater regulator scrutiny of insurance
.o*puty solvency,we also believe that
legislative tort reform may help to stem
the tide of rising medical malpractice
awards. As a result, MedPro is an dctive
participant in state and nationwide
Lfforts to bring about thesereforms'
.rii.!if.r:rfr::...:.itr:::tt:at ..
On the national level, MedPro is one of
the founders of the Health Coalition on
Liability and Access(HCl-{), which pro-
motes a similar legislative agenda with
the U.S' Congress. HCI-A' helped draft
the model malpractice reform legislation
that isthe basisfor the bill currently mak-
ing its waYthrough Congress'
For both TAPA and HCI'A, along with
similar organizations, MedPro provides
financial support, strategic planning
and industry expertise backed by more
than a century of experiencein the med-
ical malPractice insurance field'
Reimbursementreform
Evenwith all of thesechanges,one stark
reality remains-if doctors can't afford to
practice, we all lose' With the current
level of health care reimbursements
from Medicare, Medicaid and managed
fight for reimbursement reform' Until
doctors receive reasonable compensa-
don reflecting the true value of the serv-
icesthey provide, the crisiswill continue'
Beyond the halls of Congressand state
legislatures,we're busybringing our mes-
sageto state and local medical societies
and to the general public through our
media relations. When well-informed
medical professionals and private citi
zens lend their voices to the call for
reform, lawmakers are even more likely
to take notice.
And act.
On the state level, MedPro
is closelY involved with
many grassrootsmovements
to reform malPractice tort
laws. In Texas,for examPle,
we are a founding member
of the Texas Alliance for
Patient Access (TAPA)'
Begun in December 2001'
TAPA is a coalition of more
than 100 hosPitals,health
care providers' suPPIiers,
insurers and individuals
that seeksto Promote Public
understanding of malPrac-
tice issuesand PromPt leg-
islative reforms to stem the
current crisis.
HelpfulLinks
AmericanMedicalAssociation:
http//www.ama-assn.org
AmericanOstoopathicAssociation:
http/iwwwaoa-net'org/
AMAListof $tateMedicalAssociation
& NationalSPecialtYSocieties:
http://www.ama'assn.org/ama/pub/
category/7357.htm1
TortRelsrm0rqanizations
Health0oalitiononLiabilityandAecess:
http:/lwww.hcla'org/
AmericanTortRelormAssociation:
http/lvvww.atra'org/
