MPLI Executive Insights: Andre Stewart, Chief Underwriting Officer - NORCAL Mutual
DescriptionJoin us for our new Healthcare Matters segment, MPLI Executive Insights, where we interview top executives in the medical malpractice insurance industry to get their thoughts on the state of the industry and where medical liability is going next. Our first guest is Andre Stewart, chief underwriting officer at NORCAL Mutual Insurance Company. Andre joined us from the 2017 Professional Liability Underwriting Society (PLUS) Medical Professional Liability Symposium, where he spoke about the importance of underwriting profits, "shock losses", and how repealing the Affordable Care Act might increase future medical malpractice claims.
Mike Matray: You were just on a PLIS MPL Symposium panel titled: MPL Super Stats: Can We Afford to Tamper with a Good Thing? Can you summarize what was discussed?
Andre Stewart: That really was the issue of the discussion was…..are we doing too well, which we’re not. We’re not doing too good because our results are 100-plus combines in a malpractice industry. So the bigger question was if we change the way we handle our claims, is that better for results, which is secondary to is it better for the patient? And it is better for the patient because people want to get paid when they’re hurt, and they should be.
Mike Matray: You just mentioned combined ratios being around 110 as bad, but prior to 2006, the combined ratios were almost always above 100. Why is that bad today when it wasn’t 15 years ago?
Andre Stewart: Investment income. Rating agencies want to see underwriting profit on the product and not base it upon 110, 112 combines an easier investment income. So that’s one of the drivers behind it is combination ratings agencies that drive for more business efficiencies and effectiveness as well.
Mike Matray: Your panel discussed MPL’s super stats. What are some of the troubling stats?
Andre Stewart: Shock losses. That one is hard to track, but every time you pick up the newspaper you read about it, 20 million dollar claim, 10 million dollar claim. It’s the shock losses. Also, I think, patients satisfaction with healthcare. I think with the current things going on in DC, people are concerned. And I think until we can get a real grasp on satisfaction, we will always have this turbulence with healthcare.
Mike Matray: If the repeal of the Affordable Care Act is successful and people lose health insurance coverage like the Congressional Budget Office predicts, could we potentially see an increase in medical malpractice claims?
Andre Stewart: Yes. I mean, let’s face it, you don’t sue people you’re happy with. And you don’t sue people who you felt done you right. And as an industry, I think healthcare still has a long way to go as far as just basic customer service. You know, from a receptionist until, you know, the nurse that comes in and gives you your shot, until the physician I deal with that communicates with my family and me and what’s happening. When those things are still lacking in our healthcare environment, there will be lawsuits because people just are not certain about the process. They’re not certain about where they’re supposed to go next. Yes, I do think that could happen.
Mike Matray: Your panel discussed “doing the right thing” for the harmed patient as long as it’s a win-win for the provider, carrier and the bottom line. What does a win-win look like?
Andre Stewart: To me, if you take care of the patient and if you do right by the people you do business with, you win. And that’s a great question because a win, win, win, it’s like a triple play. I doubt if you’ll ever see much of that happening. See, you have to redefine what is a win. But by doing right with the people you do business with…I have yet to see a company that does right by those they work with, do bad in the end.
Mike Matray: If 80% of the claims go away without an indemnity payment and 80 of medical malpractice trials are won by the defense, why would the industry consider early resolution models?
Andre Stewart: Well, let’s keep in mind 80 percent don’t go to trial, 80 percent that we don’t pay out, but we are paying defense costs in a good percentage of those. And with defense costs, you know, it depends on the state, it depends on the circumstance. So you can call it a $100 to $300 an hour you’re paying for defense costs that’s still real money and a disproportion amount of money goes towards the defense cost of a claim. Again, when we have a 30 percent expense ratio, 80 percent loss ratio, in that ALAE part of that loss ratio, that’s real money. So, if I could settle a claim faster and pay someone $30,000 instead of paying $40,000 to defend him, just to pay them $10,000, really? You know, that’s possibly a lose, lose, lose because the carrier we’re losing, the patient is out of money as well, and the provider’s not happy because now they have a bigger claim on their record.
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