2018 Miscellaneous Medical Facilities Insurance Marketplace Update
DescriptionIn our second installment of MPLI Executive Insights, we sat down with Andrew Charron, Head of Healthcare at CapSpecialty. Mr. Charron was a speaker at the 2018 PLUS Healthcare & Medical PL Symposium, where he sat on a panel during the segment "Miscellaneous Facilities: Everyone in the Pool!. The topics covered in this interview:
1. A breakdown of the PLUS panel discussion he was apart of.
2. What has been driving the Home Healthcare Boom?
3. What are the biggest challenges facing the Miscellaneous Medical Facilities Marketplace?
4. What has been the premium trend within the Miscellaneous Medical Facilities Marketplace?
MPLI Executive Insights is a special segment of Healthcare Matters.
Healthcare Matters is a internet television program that explores the intersection of medicine and the law. Host Michael Matray, editor of Medical Liability Monitor, interviews guests from the healthcare and legal communities on issues such as tort reform, significant malpractice judgments, emerging legal trends in medical professional liability and risk management topics. Cunningham Group, the medical malpractice insurance specialists, launched Healthcare Matters and founded All MD as additional resources for its clients and the healthcare community as a whole.
(Question: Can you give a brief synopsis of what you’re going to be discussing at the 2018 PLUS Conference?)
So our presentation’s on miscellaneous medical pool. How many people are in it? For those that are in the industry, they understand that a broker today on a simple surgery center risk, they can get up to 40 quotes. So as a company, you have to look at that and say, “How do I differentiate myself in this industry?”
I think more people are looking to stay at home if they can, right? And I think parents of…or people that have older parents are looking to maybe keep those people out of those homes. I think that’s been a lot of it. I also think the housing crisis. When I look back at ’08, you know, especially for the assisted living and whatnot, people couldn’t sell their homes, right? The value of their homes left. So then it became an issue of maybe it’s cheaper to stay at home and get 24-hour care.
(Question: What has been driving the Home Healthcare Boom?)
An interesting part about the home health industry we’re seeing is the Uberization. So, you know, technology is starting to come into healthcare. When I say by that is we’re seeing companies out there that are offering basically you can go on app and say, “Hey, I need care for my mother, right, who just I need to go away for four hours.” I can Uber app that. Lot of exposure there, but it’s something that’s coming to the industry and changing it a little bit.
(Question: What are the biggest challenges in the Miscellaneous Medical Facilities Marketplace?)
Well, the challenges in the space are, how do you compete against 40, right, 40 companies? And the way we do it at Cap is we really look at it and say, “What’s our distribution strategy? What people do we have? What’s our product? And then, do we execute on all that?” This business is all about first three quotes in win, right? So if you think about that, there’s 40 quotes out there. If you get your quote in a week later, I mean, these quotes have to be in in 10 minutes, 15 minutes, half an hour. I mean, that’s how quick this pace of this business is. So it’s an exciting place to be, but you have to have all that set up to succeed.
(Question: What has been the premium trend within the Miscellaneous Medical Marketplace?)
I used to talk about this back in ’04 when I started at another company. We could write a surgery center for 40,000. Today that surgery center is 10,000. So it’s not a shrinking of the pool necessarily, it’s a shrinking of the premium. Now we were making money so there’s some sense that that charge could come down, but the premiums are a lot less. So if you look at this space, we used to predict there was an 800 million to a billion dollar industry, you know, in the core of the miscellaneous med facility. It may be 500 or 600 million today that people are competing. So there’s definitely premium going out the door.
(Question: What are the challenges for this industry over the next 5 years?)
I see the challenges being the profitability. I think just like the previous presentation, they talked about the creep in the combined ratio. I think we’re fooling ourselves if we don’t think the loss ratio pressure is gonna be there. The expense side is not going away, right? It’s expensive to deliver this. You need the people. So I think over time, the question is, how many can survive this combined ratio creep, right? If this stuff gets up over 100, 105, is the capital gonna be there? A lot of money came into the med mal. A lot of CEOs and insurance companies said, “Let’s put our capital there.” Well, eventually, when the return’s not there, you know, are these teams gonna fade away?