MagMutual's MPL Future Driven by Four Precepts

Note: The article below first appeared in the June 2013 issue of the Medical Liability Monitor, a monthly newsletter reporting on the medical professional liability insurance and risk management industries. For subscription info, please visit www.medicalliabilitymonitor.com.

In a rapidly evolving marketplace, it’s critical for a company to know what it stands for and what drives its behavior. At MAG Mutual Insurance Co. (MagMutual), one of the dominant insurers of medical professional liability (MPL) in the Southeast region of the United States, those directives are established in four precepts that drive its day-to-day business operations: 1. Always place the policyholder’s interests first, 2. Deliver the best product, 3. Maximize the company’s impact in its markets of choice and 4. Optimally manage the enterprise.

“When I started at MagMutual, one of the first things I wanted to do is get everyone in the organization—from the chairman of the board to the receptionist—to understand and agree on exactly what we stand for,” said Neil Morrell, who was hired as president and chief operating officer in April of 2012. “Once we came to an agreement, we enshrined that understanding in four precepts that drive everything we do. We deliberately use the word precept because it means a belief that drives behavior—these are not just abstract beliefs.”

Previous to assuming leadership of the Atlanta-headquartered insurer of medical liability, Morrell spent almost a decade as an executive vice president

Neil Morrell

and managing director at Willis Re, responsible for the company’s strategy and operations for its U.S. Healthcare Practice Group, representing MPL insurers in the reinsurance market. Before joining Willis Re in 2003, Morrell served with several Lloyd’s of London syndicates in the United Kingdom.

“At Willis Re, we had about 20 to 25 percent of the MPL reinsurance market,” Morrell said. “In my position leading them, I had the opportunity to see how many different companies—almost a majority of companies—in this space operate; how they think, how they approach the business, their challenges, what gets them up in the morning and what keeps them up at night. I got to see all of this at a very close, C-Suite level. It offered me a really unique, broad insight into the whole primary MPL industry, for which I’m very grateful.”

Entering the Hospital and Health System Market

Morrell assumed the helm of MagMutual as the entire MPL industry was facing the uncertainties surrounding reforms to U.S. healthcare delivery system. Most pressing of those challenges has been the shrinking number of independent medical practices as physicians look to find hospital employment rather than deal with increased costs of doing business and newly required bureaucracies. Morrell and his team looked at the changing landscape within the context of MagMutual’s four precepts and recognized future success depended on the company offering its suite of coordinated coverage, defense and patient safety products to hospitals and integrated health systems.

“In the Southeast, there is no one insurer that dominates on the hospital side,” Morrell said. “It’s pretty evenly split amongst the commercial carriers, so we saw a real gap for a mutual company to come in with all the benefits of a mutuality offering in the hospital space and we’ve been pleasantly surprised. We’re ahead of target, having written five hospitals in the last two weeks alone.”

Officially launched in March of this year and administered through its affiliated Professional Security Insurance Co., MagMutual insurance products now available to hospitals and health systems include primary hospital professional, general and employee benefit liability, primary physicians’ liability and extensive umbrella liability.

“If you look at our four precepts in the context of the hospital-employment phenomena, where there is an increasing number of our policyholders migrating to hospital-employed practice, we can’t claim we are putting our policyholders’ interests first if we aren’t able to follow the physician wherever he or she chooses to practice,” Morrell said. “Similarly, we can’t say that we are delivering the best product if at a time when physicians are increasingly employed in the hospital space, we are not offering hospital liability.

“Our third precept is to maximize our impact in our markets of choice. If you look at the lessening influence of the independent physician relative to the increasing influence of integrated healthcare systems, it’s hard to argue that the environment of integrated healthcare isn’t becoming increasingly important. If we want to maximize our impact over patient safety, over the plaintiff and defense bar and on the whole legislative tort reform aspect, we need to be able to influence not only the independent physician, but also the whole integrated practice of medicine. Offering a hospital product alongside the physician product helps us maximize our impact in our markets of choice.

“As to optimally managing the enterprise, MagMutual very proudly sits on $1.5 billion in assets and a very large surplus. With the delivery of healthcare changing, we wouldn’t be doing our job properly if we were to simply manage a shrinking enterprise. We are the custodians of the firm on behalf of our policyholders. To optimally manage the enterprise we needed to make sure we are at the vanguard of medical liability, not just a certain part of it.”

(This is the first in a two part series on MagMutual. Please revisit tomorrow for the article’s conclusion.)

 

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