It’s All About Content
A more immersive reading experience? We’re glad you asked. A cleaner layout and typographic design keeps your focus on the content. The “infinite scroll,” simplified navigation and Google search make finding interesting articles easier. And no matter your screen size – PC, tablet or phone – the site is optimized to ensure the same great experience.
The benefits of the site are mostly self-evident. But a few features are worth highlighting to help get you started:
Current Section: Displays the issue, topic, author or section you are currently viewing.
Content Ribbon: Lists all of the articles in the current section. Easily browse the articles and click on any tile to load that article into the infinite scroll.
Infinite Scroll: Read each article from top to bottom without having to click to continue. The next article loads automatically so you can continuously read/browse an entire issue or section – similar to how you read a print magazine.
Full Screen: Click the arrow to hide the content ribbon and create a clutter-free article reading experience. Also handy for smaller screens or tablets.
More Ways to Explore
Nav Bar: Click the gray bar to reveal several filters, sections and topics that tailor articles to your interests.
Authors/Topics: Reading an article you like? Click on the author’s name to see all of their content or click on one of the topics to load that section.
Google Search: Still not finding what you want? The search bar slides out to help you find it.
Responsive Design (Mobile Optimized)
The site utilizes a responsive design. That means the layout automatically adjusts to different screen sizes. You can see the technology in action by adjusting the size of your browser window. It’s pretty cool.
But responsive design is more than just a neat trick. It ensures that our new site looks great and works well on all screen sizes. Call us a website or, if you like, a web app – the site combines the benefits of the free and open web with the elegance of an application.
More to Come
But we are not done yet. The site enables us to integrate new content types into our stories. Over the next year, you will see more charts, graphs, infographics, videos, photos, etc.
Be sure to sign-up for one of our newsletters to stay abreast of all these developments as well as the latest articles and content we publish.
In the meantime, we would love to hear your feedback about the new site or anything else we do. Write to us at email@example.com.
The Plague of Baltimore
Disclaimer: The events depicted in this scenario are fictitious. Any similarity to any corporation or person, living or dead, is merely coincidental.
A Disturbing Email
Carley Fitzpatrick flipped the line and the blueberry-colored, 7-inch, Texas-rigged rubber worm sank, almost motionless, next to the sunken tree that projected from the near bank of Lake Rita.
She inhaled and exhaled deeply, balancing herself on the wooden seat of the canoe. Must be calm, she reminded herself, must be very calm and settled to do this right.
Carley looked away from her target, to where the sun was banking down below the green crest of trees on the ridge above the lake.
She twitched her rod tip once; paused for several seconds and then twitched it again. Then came the long, strong pull that signified a largemouth bass had sucked in the artificial worm.
She hooked him, netted him, took a brief admiring glance and put him back in the water unharmed.
Paddling back to her SUV, Carley remembered that she wanted to check back in with the office before going home. As the COO of Blue Mountain Regional Medical Center in York County, she was a key player in the hospital group’s expansion plans, putting in extra hours as it built itself into a larger system.
With the outdoorsy Central Pennsylvania lifestyle as a draw, Blue Mountain was successful in drawing talent from Washington, D.C., Philadelphia, Baltimore and Harrisburg. Making the switch from freeways and subways to the countryside dotted with horse farms and wineries was not that hard a sell.
With health care reform on the march, there were a number of smaller, more urban practices that were more than willing to have their assets and liabilities acquired by a hospital system. Health care reform just created too many uncertainties.
Back at the office, Carley opened a disturbing email from the office of Blue Mountain’s general counsel.
The email said that 12 hospitalists in a Baltimore practice that Blue Mountain had acquired six months ago were now defendants in a class-action lawsuit stemming from a hospital-acquired infection outbreak at a Baltimore teaching hospital.
The outbreak had been dubbed “The Plague of Baltimore” by the local press.
“Sending this to you as an FYI, we’re not too concerned about it at this point,” Blue Mountain’s youngish general counsel had typed to Carley in the email.
“I’m not so sure that we shouldn’t be worried about it,” Carley said to herself under her breath as the sky outside her office window darkened into nightfall.
“Can you follow up with me on this or direct me to a copy of the lawsuit?” she wrote back to the general counsel.
Carley had been around long enough to know that Baltimore, along with some other East Coast cities like Philadelphia, fell into the category of legal venue where judge and jury verdicts in personal injury cases could balloon far beyond what might be considered reasonable reparation.
The general counsel may have been good on paper at Dickinson Law, but he just might have a lot left to learn here in the real world.
Carley made a mental note to keep the “Baltimore 12” on her radar.
Look Back in Anguish
With the fate of the “Baltimore 12” never leaving her consciousness for long, Carley called a meeting with Blue Mountain’s director of risk management and insurance, Nathan Haines.
“I just want to be sure,” she said, explaining why she was asking Nate to review with her, yet again, the hospital’s professional liability coverage.
“No problem,” Nate said.
“We’ve got a $5 million self-insured retention and a $10 million excess tower on top of that,” Nate said.
“Which means what again?” Carley said.
“Let’s just say one of our doctors gets sued for medical malpractice and the jury finds against him for $1 million,” Nate said. “We’re self-insured for $5 million, we pay that $1 million out of our pockets.”
“Okay,” Carley said. “But what if …”
Nate knew where she was going.
“If we saw a loss of $6 million,” he said, finishing her thought, “which would be highly unusual, we’d pay $5 million out of pocket and the insurance company would pay $1 million,” Nate said.
“Why so much retention?” said Carley.
“Eh, it’s kind of a balancing act,” said Nate. “You’re trying to offset premium costs by taking some of the risk on.”
“I’d hate to be a risk manager,” Carley said to herself as she left the meeting with Nate.
When the “Baltimore 12” case went to trial, the full brunt of what Blue Mountain was facing became more evident.
It turned out that two deaths were linked to the hospital infection outbreak in Baltimore. One of the fatalities was David Brandt, the COO of a well-capitalized, up-and-coming tech firm with naval engineering connections based in Annapolis. Brandt had gone into the Baltimore hospital for knee surgery and hadn’t come out.
The other victim was Anna French, a striking attorney and mother of three who underwent an emergency appendectomy, acquired an infection and died a lingering, painful death.
The framed photographic portrait of a smiling Anna with her equally photogenic husband and children taken on the oak-leaf-speckled lawn of their family home in October was all the jury needs to see.
Three jury members, two of them male, wept openly. The pain and suffering amount decided on was in the tens of millions.
The lifetime income loss of the deceased COO came in at the very high end as well. Aggregate pain and suffering and loss of income determination from the juries in those two cases alone totaled $45 million.
Woulda’, Coulda’, Shoulda’
When Blue Mountain acquired the assets and liabilities of the Baltimore 12, trout fishing and sipping Cabernet Franc next to the fields it was grown in weren’t the only draws.
To lure that talent, Blue Mountain had agreed to cover the physicians’ prior acts as part of their employment benefits.
Talking to Nathan Haines, Carley got yet another insurance lesson.
“We’ve got $20 million in liability in connection with these 12 hospitalists from Baltimore,” Nathan told Carley and the CFO, Fred Rutter, in a closed door meeting on a cold January morning.
“That’s pain and suffering, loss of income and attorneys’ fees,” Nathan said.
The room was silent for a minute.
“What about an appeal?” Fred said just to say something.
“From what the attorneys for the carrier tell us, that would be throwing good money after bad,” Nathan replied.
“Should I go on?”
“Sure,” Fred said.
“The physicians are covered under our limits,” Nathan said. “When we hired them, we didn’t negotiate the option that they have individual limits, so their liabilities hit our entire program,” Nathan said.
“Which means?” said Carley.
“Which means that we are looking at $10 million in uncovered liability, with the carrier picking up the other $10 million,” Nathan said.
In the months after that conversation, Blue Mountain Regional Medical Center went from an organization that was expanding and pervaded by a sense of optimism to an organization in retreat.
The aftermath of the “Baltimore 12” jury verdict was that Blue Mountain was going to have to scrap to find a professional liability insurance carrier for the coming year. It was also going to have to take an even higher retention than it had previously.
It was also looking at its additional newly acquired practices with a jaundiced eye.
Attempts to renegotiate professional liability indemnity arrangements after the fact were, to say the least, a point of contention with the doctors’ groups.
As she drove to work one morning the following May, Carley cast a doleful eye out the window to Lake Rita.
She would have liked to be jigging for crappies on the lake, instead of putting in her seventh straight 11-hour day.
The future of Blue Mountain Regional was highly uncertain, having looked so bright just a year or so ago.
“Maybe I should start looking for a job in Baltimore,” Carley said to herself as she drove into the parking lot at work.
A hospital group seeks to grow by attracting medical practices from around the Middle Atlantic region. But its plans backfire when its insurance coverage is misaligned with the professional liability exposures that some of the acquired physicians bring into the company.
1. Know what you are buying: The Blue Mountain Regional Medical Center erred by not fully understanding the professional liability risks carried by the physicians in the practices it was acquiring.
2. Tailor your coverage: As a hospital group looking to expand by acquiring regional practices, Blue Mountain needed to tailor its coverage to better mitigate potential professional liability risks that were being brought on board. Covering all prior acts with no individual limits was clearly not the way to go here.
3. Risk management needs to drive the bus: Blue Mountain clearly did not have risk management integrated into its acquisition and growth strategies. Risk management should have had more of a voice in what coverage physicians were being offered as a part of their benefits packages.
4. Know your legal venues: The risk to the hospital group in this scenario was compounded by the legal venue the professional liability was being adjudicated in. Professionals being brought in from a legal venue that has a reputation for outsized settlements should be examined with extra care.
5. Beware of the unknowns: The Affordable Care Act has placed health care risk management in flux like never before. Any growth or profit strategy that does not take this vast uncertainty into account is in all likelihood a flawed strategy.
7 Questions to Answer before Choosing a Captive Insurance Domicile
Risk managers: Do your due diligence!
It seems as if every state in America, as well as many offshore locations, believes that they can pass captive legislation and declare, “We are open for business!”
In fact, nearly 40 states and dozens of offshore locations have enabling captive insurance legislation to do just that.
With so many choices how do you decide who is experienced enough to support the myriad of fiscal and regulatory requirements needed to ensure the long term success of your captive insurance company?
“There are certainly a lot of choices,” said Mike Meehan, a consultant with Milliman, an actuarial firm based out of Boston, Massachusetts, “but not all domiciles are created equal.”
Among the crowd, there are several long-standing domiciles that offer the legislative, regulatory and infrastructure support that makes captive ownership not only a successful risk management tool but also an efficient entity to manage and operate.
Selecting a domicile depends on many factors, but answering these seven questions will help focus your selection process on the domiciles that best fit your needs.
1. Is the domicile stable, proven and committed to the industry for the long term?
The more economic impact that the captive industry has on the domicile, the more likely it is that captives will receive ongoing regulatory and legislative support. The insurance industry moves very quickly and a domicile needs to be constantly adapting to stay up to date. How long has the domicile been operating and have they been consistent in their activity over the long term?
The number of active captive licenses, amount of gross premium written in a domicile and the tax revenue and fees collected can indicate how important the industry is to the jurisdiction’s bottom line. The strength of the infrastructure and the number of jobs created by the captive industry are also very relevant to a domicile’s commitment.
“It needs to be a win – win situation between the captives and the jurisdiction because if not, the domicile is often not committed for the long term,” said Dan Kusalia, Partner with Crowe Hortwath LLP focused on insurance company tax.
Vermont, for example, has been licensing captives since 1981 and had 589 active captives at the end of 2015, making it the largest domestic domicile and third largest in the world. Its captive insurance companies wrote over $25 billion in gross written premiums. The Vermont State Legislature actively supports an industry that creates significant tax revenue, jobs and tourist activity.
2. Are the domicile’s captives made up of your peer group?
The demographics of a domicile’s captive companies also indicate how well-suited the location may be for a business in a particular industry sector. Making sure that the jurisdiction has experience in the type and form of captive you are looking to establish is critical.
“Be among your peer group. Look around and ask, ‘Who else is like me?’” said Meehan. “Does the jurisdiction have experience licensing and regulating the lines of coverage for other businesses in your industry sector?”
3. Are the regulators experienced and consistent?
It takes captive-specific expertise and broad experience to be an effective regulator.
A domicile with a stable and long-term, top-tier regulator is able to create a regulatory environment that is consistent and predictable. Simply put, quality regulation and longevity matter a lot.
“If domicile regulators are inexperienced, turnaround time will be slower with more hurdles. More experience means it is much easier operating your business, especially as your captive grows over time,” said Kusalia.
For example, over the past 35 years, only three leaders have helmed Vermont’s captive regulatory team. Current Deputy Commissioner David Provost is one of the longest tenured chief regulators and is a 25-year veteran in the captive insurance industry. That experienced and consistent leadership enables the domicile to not only attract quality companies, but also to provide expert guidance on the formation process and keep the daily operations running smoothly.
4. Are there world-class support services available to help manage your captive?
The quality of advisors and managers available to assist you will have a large impact on the success of your captive as well as the ease of managing the ongoing operations.
“Most companies don’t have the expertise to operate an insurance company when you form a captive, so you need to help build them a team,” Jeffrey Kenneson, a Senior Vice President with R&Q Quest Management Services Limited.
Vermont boasts arguably the most stable and experienced captive infrastructure in the world. Many of the leading captive management companies have their headquarters for their Global, North America and U.S. operations based in Vermont. Experienced options for captive managers, accountants, auditors, actuaries, bankers, lawyers, and investment professionals are abundant in Vermont.
5. Can the domicile both efficiently license and provide on-going support to your captive as it grows to cover new lines of coverage and risks?
Licensing a new captive is just the beginning. Find out how long it takes for the application to get approved and how long it takes for an approval of a plan change of your captive’s operations.
A company’s risks will inevitably change over time. The captive will need to make plan changes which can include adding new lines of business. The speed with which your domicile’s regulatory branch reviews and approves these plan changes can make a critical difference in your captive’s growth and success.
The size of a captive division’s staff plays a big role in its speed and efficiency. Complex feasibility studies and actuarial analyses required for an application can take a lot of expertise and resources. A larger regulatory team will handle those examinations more efficiently. A 35-person staff like Vermont’s, for example, typically licenses a completed application within 30 days and reviews plan changes in a matter of days.
6. What are the real costs to establishing and managing your captive?
It is important to factor in travel costs, the local costs of service providers, operating fees, and examination fees. Some states that do not impose a premium tax make up for it in high exam fees, which captives must be prepared for. Though Vermont does charge a premium tax, its examination fees are considered some of the least expensive options in the marketplace.
It is also important to consider the ease and professionalism of doing business with a domicile in the ongoing operations of your captive insurance company.
“The cost of doing business in a domicile goes far beyond simply the fixed cost required. If you can’t efficiently operate due to slow turn-around time or added obstacles, chances are you have made the wrong choice,” said Kenneson.
7. What is the domicile’s reputation?
Make sure to ask around and see what industry experts with experience in multiple domiciles have to say about the jurisdiction. Make sure the domicile isn’t known for only licensing certain types of captives that don’t fit your profile. Will it matter to your board of directors if your local newspaper decides to print a story announcing your new insurance subsidiary licensed in some far away location?
Are companies leaving the jurisdiction in high numbers and if so, why? Is the domicile actively licensing redomestications — when an existing captive moves from one domicile to another? This type of movement can often be a positive indicator to trends in a domicile. If companies of a particular size or sector are consistently moving to one state, it may indicate that the domicile has expertise particularly suited to that sector.
Redomestications made up 11 of the 33 new captives in Vermont in 2015. This trend is a positive one as it speaks to the strength of Vermont. It reinforces why Vermont is known throughout the world as the ‘Gold Standard’ of domiciles.
Asking the right questions and choosing a domicile that meets your needs both today and for the long term is vital to your overall success. As a risk manager you do not want surprises or headaches because you did not ask the right questions. Do the due diligence today so that you can ensure your peace of mind by choosing the right domicile to meet your needs.
For more information about the State of Vermont’s Captive Insurance, visit their website: VermontCaptive.com.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with the State of Vermont. The editorial staff of Risk & Insurance had no role in its preparation.