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Healthcare Captives Are Focus of New Video Series

michael-maglaras
August 06, 2015

Healthcare captive expert Michael Maglaras discusses the state of the healthcare professional liability marketplace, how accountable care is affecting healthcare liability captives, and trends in the use of captives by healthcare institutions in the latest series of Captive Thought Leader Videos in Captive.com. Each 2-5-minute video offers practical insights and interesting predictions into the use of captive insurance by healthcare institutions.

Healthcare liability captives represent a very meaningful market segment. In Vermont and Cayman, for example, in terms of numbers of licenses as well as premium volume, captives underwriting healthcare liability coverages predominate.

Mr. Maglaras, principal of Michael Maglaras & Company, believes the soft medical professional liability market experienced over the past decade will continue for many years to come. This begs the question of what will become of healthcare liability captives. He contends they will continue to thrive because they have evolved to the point that they are focused much less on “price” and a great deal more on control over the claims management and adjustment process. For example, many have now embraced and effectively employ the “disclose and apologize” approach to managing situations where errors are made. Simply put, healthcare liability captives give healthcare systems control over their destiny, and they will not give this up.

Increasingly, the healthcare system owners of captives will need to carefully examine the use of captive capital and surplus to support the underwriting of insurance and reinsurance in areas that are expected to make a difference in the financial margins of captive parents. In the videos, Mr. Maglaras discusses three types of risks for which healthcare liability captives will be increasingly used in the future: stop loss capitation, cyber and breach liability, and directors and officers liability.

Healthcare liability captives contain a wealth of historical claim data related to patient safety failures and lapses in the standard of care. Under accountable care and under population management, breaches in the standard of care will increasingly not be reimbursed by payers. Historically, there was little dialogue between risk management departments and quality improvement departments in healthcare systems. The walls are coming down, and we are seeing improvement in the quality of care directly related to the mistakes of the past. Healthcare liability captives will be on the forefront of improving quality and outcomes under accountable care and will need greatly expanded budgets and support services to accomplish this.

Lastly, he points out that healthcare liability captives are essentially warehouses for liability claims that have accumulated substantial amounts of claim data. They are now beginning to mine that data to determine ways to improve the quality of care. The management of reputational risk is one of the most significant risks facing healthcare institutions, and the integration of claims data into a quality improvement process is a key to managing this risk. This is changing the medical liability framework right before our eyes.

With the addition of this series, there are now 42 educational videos accessible without cost on Captive.com.

 Mr. Maglaras’s videos on healthcare captives may be viewed here.

 Browse the complete captive insurance video library by topic here.

Pictured in photo above: Michael Maglaras, Principal, Michael Maglaras & Company

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