Marketing Mid-Continent—Turning vision into innovation MGA targets less volatile health care niches, establishes link to ASPN By Sandra Carcione We all know that the best way to start a specialty is to recognize an unsatisfied need in the marketplace—and then meet that need. That’s the successful philosophy of Mid-Continent, a Houston, Texas-based managing general agency that underwrites various types of professional liability coverage for health care entities on a nationwide basis. Phil Cabaud, president of Mid-Continent, explains, “Initially, we saw that large health care systems were underserved. For example, a hospital might own an interest in a home health care service or ambulance services or an outpatient clinic. However, because the hospital did not own a majority stake in the operation, they could not self-insure it,” he said. “We saw the need and expanded from there into this marketplace.” Mid-Continent originally was formed in 1985 to write allied and miscellaneous health care programs and then began branching into other health care programs in 2003. Today, it writes professional liability, errors and omissions liability, general liability and non-owned automobile liability coverage for various health care entities in select or all states, depending on the program.
The core programs underwritten by Mid-Continent are designed to serve: allied and miscellaneous health care providers; critical access, rural and specialized hospitals; long term care facilities, which includes skilled nursing, assisted living and independent living facilities; and locum tenens staffing organizations. The MGA also underwrites and insures nurses, x-ray technicians, physicians and surgeons and other specialized personnel, when they are employed by an insured hospital. In all cases, Mid-Continent builds its products from the ground up. “Many MGAs get appointments with carriers looking for distribution and get handed products to sell,” says Cabaud. “We see a need, do the research, then we build the rates and the policy forms.” To further its entrepreneurial approach to product/program development and fulfill the needs of independent agents, Mid-Continent recently joined the Agency Specialty Product Network (ASPN), a unit of Chicago-based Aon Corporation. ASPN includes more than 35 provider companies, consisting of carriers, wholesalers, and managing general underwriters and specialty providers to serve the independent agency network and its clients Jerry Tegan, ASPN president and CEO, says, “Mid-Continent’s ability to identify, research and develop its own products to meet the market’s needs separates them from others in the marketplace. ASPN, too, is an entrepreneurial distribution system that brings unique niche products, programs and services to the independent agency network for their clients. The fit between the two organizations was unquestionable.” Cabaud explains that in marketing its products, “We find that we have to convince carrier partners to try a unique approach, something different that sets them apart from the norm. Understandably, they want to see how it will work. We then present them with data to back up our vision. This approach takes time and energy, but since we don’t have our own capital to take [on] risk we rely on insurance carriers to understand and support our vision.” Usually, Mid-Continent works with Lloyd’s of London because it is a “long-term, credible E&S market,” says Cabaud. “During the hard market, many domestic carriers exited our lines of insurance. Lloyd’s has been a stable and dependable carrier for professional liability coverage in the U.S. market.” Part of the challenge of persuading carriers to enter untested product/program areas goes beyond specific risks in these health care niches and relates to possible legal issues. “There are always major risks in our legal environment,” says Cabaud. “With joint and several liability, for example, the party with the higher limits can end up paying the loss. When all of the parties have similar professional liability coverage, it’s the claims managers who have to sort it out.
“Another problem is ostensible agency. This problem arises because contracted staff often look like employees, “ Cabaud continues. “A nurse from a staffing agency, for example, wears a name tag with the name of the hospital on it. If there’s a problem with her care, the hospital is usually named in a suit. Then there’s finger pointing. We defuse this issue by verifying the limits of the contractor and matching them; then we are not the deep pocket.” Cabaud adds that ostensible agency is an exposure that Mid-Continent is “comfortable with” when claims arise. “This issue is often addressed in the staffing agency’s contract with the hospital or in previous court rulings.” Mid-Continent has benefited from professional liability reform in a growing number of states, especially its home state of Texas. However, many of the classes it serves have not been as historically volatile as others such as nursing homes and large health care systems. Mid-Continent’s specialties, such as allied health care organizations and small hospitals, were never singled out for significant jury awards, Cabaud says. “We target those classes with more stable results. However, after tort reform, total claims volume has dropped, especially for non-economic damages.” Innovation is paramount Mid-Continent relies on its agents to identify client needs, and now it also has come to rely on ASPN’s expertise and experience with the independent agency network, so the underwriter can develop new solutions for underserved markets, Cabaud says. “We’re always open to new ideas and suggestions.” For example, the MGA has just introduced professional liability coverage for clinical research providers. This coverage will be marketed to research institutions, hospitals and those individuals who actually run the clinical research. While the sector may represent high risks, Mid-Continent has brought on a specialist in this area who previously worked for Johns Hopkins. All of the underwriters at Mid-Continent have backgrounds in underwriting health care risks. Cabaud says, “I worked for an insurance company underwriting D&O, E&O, managed care and medical malpractice.” Larry Keefe, vice president, says, “I started as an agent/broker selling insurance to hospitals, physicians and allied health care organizations. Then I worked for an insurance company selling medical malpractice and as an underwriting manager running a physician unit.” Building distribution Mid-Continent does not sell its products directly to health care institutions. All business is sold through wholesale and retail agencies and brokers. “We have our own surplus licenses,” says Cabaud, “but it’s easier when wholesalers or surplus lines licensed agencies are involved in the transaction.” Currently, Mid-Continent has a network of wholesalers who have worked with the MGA for years. “We’ve worked mainly with brokers who specialize in our niche segments such as hospitals, surgical centers or allied health care,” says Cabaud. Through ASPN, Mid-Continent has now expanded its distribution network to market its products and programs. “ASPN is marketing our product in seven regions across the U.S. through its senior marketing representatives,” says Cabaud. “ASPN reps meet with independent agents and market Mid-Continent products face to face. Essentially ASPN is our sales staff. “We want to triple the size of our agency by 2010 and introduce at least one new product per year over the next five years,” Cabaud continues. “So, because of our growth goals, we were faced with the decision of either hiring our own regional marketing representatives or partnering with an organization that already had the professional liability expertise. It’s a good partnership. ASPN was looking for a provider company with our products and underwriting expertise, and we were looking to build our distribution network.” Becoming a Mid-Continent agent Although Mid-Continent works mostly with wholesale agencies, it also has relationships with 500 or more retail agents in specific geographic areas. Some are professional liability specialists in niches that match its capabilities. Others might be retail property/casualty agents who have one or two hospital or health care accounts. “We have quite a few smaller agencies, particularly in our small and rural hospital program,” says Cabaud. For those agencies with only occasional health care placement needs, Mid-Continent will provide education on these classes of business and how to sell them. All new independent insurance agencies require some educating, says Cabaud. Keefe adds, “We pride ourselves on the expertise of our underwriters. “They point out the major issues when talking to independent insurance agencies, helping agents distinguish good vs. challenging risks, and pointing out those areas that are helpful in answering prospects’ questions.” Cabaud has this advice for agents who want to get into these specialty niches: “We recommend that they find a good database of contacts in the specialty niche first. Second, become acquainted with the types of claims and legal environment challenging the classes of business they are targeting.” Keefe adds that it’s also important for agents to educate themselves on specific classes of business and the benefits of the products they sell. “Too many agents try to sell on price,” he says. “We find that the most effective agents sell service and expertise over price.” He notes that sometimes smaller retail agents don’t have the ability to get standard markets, due to lack of volume. “They can come to us. We do specialty lines but we’re not worried about a volume commitment. We’d like them to think of Mid-Continent when they come across that one health care account.” Tegan says the partnership between Mid-Continent and ASPN brings a much needed product line and expertise to the independent agency network for its clients. “We’re excited about Mid-Continent’s commitment to bring to the marketplace one new product/program each year over the next five years. No one has made a commitment like this, and ASPN is here to support Mid-Continent as its marketing and distribution arm.” * |
||||||||
|
