INSURANCE MARKET UPDATE
Physicians being hit with significant rate increases for their medical malpractice coverage had already begun to flood the market with submissions before St. Paul started ending coverage when renewals came due, according to Bill Yurek, president of AVRECO Brokerage, Chicago, an MGA which specializes in medical malpractice. "I don't know that companies can handle the influx of business," he says, noting that agents looking to place medical malpractice business "need to get started early. You should try and get submissions together at least three months in advance and make sure the information is complete. You need up-to-date loss information, and it would help to have the loss information available electronically so companies can plug it into their rating formulae. Most companies are doing loss rating on large groups and large hospitals. Anything you can provide electronically will be helpful. It could get your submission closer to the top of the pile."
Yurek says that increases have been averaging about 30% for physicians. Hospitals are seeing increases ranging from 35% to 350%. "For larger hospitals, premium increases are accompanied with higher SIRs and minimum attachment points." He points out, however, that the medical malpractice market is coming off of a "14-year period of reduced rates. When we analyzed what large institutions were paying 14 years ago and looked at it in today's dollars, the increases and higher SIRs really represent a catch-up." For example, he noted that a large institution that had a $2 million SIR 14 years ago "should have an SIR of about $6 million today."
He continues by pointing out that "January 1 was very interesting. There has been a dramatic reduction in limits available. Last year, we had eight companies who would give us $50 million each. Only one of those still offers $50 million. Many dropped it to $25 million and even less."
Don Akin of CFR Insurance, an independent insurance agency based in Tulsa, Oklahoma, says the "capacity is stretched. Submissions have tripled." He agreed that submissions need to be electronic and need to be in the insurance company's hands five months before the renewal date and "then you'll get a response one day before renewal."
Akin continued by pointing out that January 1 was just the beginning. "July 1 is also a very important renewal date for many medical malpractice contracts and it's just going to be ugly."
Tennant acquires horticultural specialist
Tennant Risk Services, a wholesale underwriting manager and broker, Hartford, Connecticut, acquired Butler Florists & Growers Insurance of Westborough, Massachusetts. As part of Tennant, Butler will continue to provide specialized property/casualty coverages to a wide range of horticultural risks, including florists, garden centers, greenhouses, growers, farms, arborists, and wineries. Robert and Harriet Butler will continue to head the horticultural specialist.
Robert Butler said the "combination of our specialized horticultural experience and Tennant's expertise in developing and managing specialty lines programs provides us with increased product capabilities and some very exciting opportunities for 2002. We already have begun development of some dramatic enhancements to our product offerings."
St. Paul to renew Fireman's Fund surety bonds
The St. Paul Companies announced an agreement to acquire the right to renew surety bond business previously underwritten by Fireman's Fund Insurance Company.
Fireman's Fund's surety bond business represented approximately $103 million in gross written premium for 2000. The acquisition involves renewal rights for approximately 800 contract and commercial surety accounts in the United States. St. Paul assumes no past liabilities on the business.
St. Paul said the acquisition will expand its presence as the largest U.S. writer of surety bond business and will increase its market penetration in the western states, particularly California. St. Paul had net written premium of $426 million in surety bonds for 2000 ($320 million through nine months of 2001).
Selective expands flood operation
Selective Insurance Group purchased servicing rights to flood insurance policies from the Highlands Insurance Group in New Jersey. Flood policies are serviced by Selective Insurance Company of the Southeast as a Write Your Own (WYO) carrier for the National Flood Insurance Program. Selective previously was endorsed as the flood insurance servicing carrier for the Independent Insurance Agents of America.
The Highlands acquisition represents more than 5,200 policies and $2.1 million in premium, and follows Selective's July 2001 purchase of servicing rights to 15,200 policies from Union America Insurance Company in Miami. Selective now services more than 119,000 flood insurance policies through NFIP, representing more than $46 million in premium.
ISO offers EPLI with risk management
Insurance Services Office introduced ISO Employers Advantage, which combines ISO's basic employment practices liability insurance with underwriting guidelines and human resources risk management services. The program provides risk management services to insurers and reinsurers in business alliances with the workplace HELPLINE and Laurdan Associates, consulting firms that specialize in this area.
The program also provides insurers underwriting materials, online or telephone support, and training for underwriters and agents.