Midwest Insurance Group:
The Professional Liability Solution for Nursing Homes
The senior living marketplace is expanding and becoming much more diverse. In fact, according to one national survey, demand for senior housing is increasing due to the retirement of baby boomers and that 10,000 baby boomers a day turn 65, a trend that we will witness for another 15 years.
Caitlin Morgan Insurance Services, which has been providing Professional Liability coverage to owners and operators of senior living facilities from their Indiana headquarters for the past 25 years, knows very well that opportunity and growth need to be balanced with experienced consultation and choices, especially when something unexpected occurs. Indeed, it was a very serious unexpected disruption in the Professional Liability marketplace not so long ago that challenged the team at Caitlin Morgan to deliver a solution as nursing home owners faced an increase in their premium as much as 1,000% or more – if they could obtain coverage at all.
Midwest Insurance Group: A Risk Retention Group
Insurance premiums have historically increased and decreased in various cycles, though no one knows exactly when premiums will rise. In some cycles, premiums suddenly increase, and in some severe cycles, premiums not only rise dramatically, but insurance companies exit the market. Such was the market not so long ago where in some cases, coverage was not only unaffordable, there was also no coverage to be found. Immediately understanding the difficult and limited marketplace regarding Professional Liability coverage to nursing homes, Caitlin Morgan began to consult with stakeholders and policyholders, state regulators, independent actuaries and reinsurers in search of a viable solution. Caitlin Morgan’s team also added guiding principles sought by those in the senior living industry, and their experienced-backed history of successful underwriting, risk management, and claims expertise. Their goal was to provide an innovative solution that not only would provide an answer to the current crisis but a viable, long-term alternative to the traditional insurance market that policyholders could rely upon for the future. The result was the creation of Midwest Insurance Group, Inc., a risk retention group owned by its policyholders.
Policyholders under Midwest Insurance Group are provided professional and general liability coverage. Policy form may either be claims made or occurrence. All policyholders participate 100% in the Patient Compensation Fund (PCF). Effective July 1, 2017, Midwest Insurance Group provides $400,000 in Professional Liability and General Liability limits with the state taking on the next $800,000 (if less than 100 beds) or $1,600,000 (if more than 100 beds) of any one claim. Midwest Insurance Group is also reinsured by Lloyds of London, with an A rating and over $2 billion of assets. This organization provides extra insurance coverage for catastrophic events and frequency of claims.
- Limits provided per location
- Defense costs outside limits
- Claims made and occurrence forms both available
- New states are considered based on volume, economy of scale and the existing legal environment
- Alternative risk options:
- Fully Funded
- Deductible Reimbursement
What Are the Eligibility Requirements?
Midwest Insurance Group currently insures Nursing Homes and Physicians for Professional and General Liability coverage. We focus on those risks that exhibit a history of pro-active risk management, better than average loss history, and attention to the safety of patients.
What Is A Risk Retention Group (RRG)?
Risk Retention Groups are groups of policyholders with similar risk traits who may group together to start their own insurance company under the Federal Liability Risk Retention Act of 1986. Authorization under the federal statute allows a group to be incorporated in one state but authorized to do business in all states (subject to registration).
RRGs can insure all types of third-party liability, such as General Liability, Errors and Omissions, Directors and Officers, Medical Malpractice, Professional Liability, Products Liability, and so forth. Because members own the RRG, there are several key advantages of participation including:
- Lower Rates
- Broader Coverage
- Effective Loss Control/Risk Management Programs
- Favorable Loss Experience
- Access to Reinsurance Markets
- Stability of Coverage (notwithstanding insurance market cycles)