PRI Launches New Admitted MPL Insurer EmPRO in New York

Physicians’ Reciprocal Insurers (PRI) launched EmPRO Insurance Co., a new subsidiary insurer domiciled and authorized to write medical professional liability business in the State of New York, on September 15.

Wholly-owned by PRI, EmPRO is administered by PRIMMA LLC, PRI’s attorney-in-fact. Current PRI insureds will be transitioned to EmPRO when their policies renew without any interruption in coverage, and all new policies will be written through EmPRO.

When PRIMMA took over as attorney-in-fact for PRI on July 1, 2017, the insurer had a negative $341 million surplus. Since that date, PRI has posted an overall surplus improvement of more than $256 million to negative $84.8 million at the end of the second-quarter 2020.

“We’ve seen a continued, quarter-by-quarter surplus improvement driven by a renewed focus on underwriting, which has dropped our loss ratio from the mid-80s to the mid-60s, across all lines,” said Bruce Shulan, PRI vice chairman, president and chief executive officer. “Despite that improvement, reaching new business has been difficult due to the anti-competitive effect of PRI’s insolvency.

“Notwithstanding the protection from state legislation, our insolvency continued to be a barrier. We set out to address that with a plan to set up a subsidiary to PRI, a solvent stock insurance subsidiary, and move PRI’s business into the stock insurance subsidiary so that when we’re selling new business, new policies, we would no longer be under that taint of insolvency.”

In executing that plan, PRI acquired Empire Insurance Co. via a shell company transaction, renamed and rebranded it, and infused the new entity with $100 million of its approximately $900 million in assets.

“EmPRO, on a standalone basis, has $100 million of surplus, wholly-owned by PRI,” said Brian Nolan, PRI executive vice president. “The infusion is reflected on the PRI balance sheet as a $100 million investment in a subsidiary. While PRI may be insolvent, we maintained enough liquidity in our balance sheet for the EmPRO transaction.”

As its attorney-in-fact, PRIMMA will run-off all PRI legacy claims as well as manage the EmPRO business. EmPRO profits will be ceded to PRI until it reaches solvency. PRI will still exist, and all EmPRO policyholders will be subscribers of the PRI insurance reciprocal.

“Any suggestion we’re trying to favor EmPRO to the detriment of PRI is absolutely incorrect,” Shulan said. “This is PRI putting up the capital, and this is PRI absolutely getting the benefit of EmPRO. And because the business mix, operations, technology and people are all the same, the only real difference between PRI and EmPRO is the ability to issue a policy out of a solvent company rather than an insolvent one.”

According to PRI, the move has already attracted the attention of the New York medical professional liability community.

“We’ve received a number of calls from brokers we haven’t worked with in the past,” Nolan said. “They’re trying to get a sense of what we’re all about on a go-forward basis. Naturally, moving from an insolvent company to a solvent one makes it much easier for brokers to market and sell our products.”

“The market is going to notice the solvency, not necessarily where we came from,” added Shulan. “But our view is that where we came from is an important part of the story. It’s been very exciting, and frankly, very unique. I dare say that nobody can point to another insurance company in the United States that started out in the position we were in when we took over at PRI and has traveled this kind of distance at this kind of speed.”

This article was written by Michael Matray, the Editor of Medical Liability Monitor.

If you are looking to get a quote from PRI/EmPRO and the other major medical malpractice insurance carriers in New York, click here.

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