A PROVEN MODEL THAT WORKS

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Theresa Mosley
5 years ago
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We are coming to terms with this Brave New World where enormous opportunity converges with new client models and new client exposures.

2 BUILDING OUR REPUTATION BY DEFENDING YOURS A PROVEN MODEL THAT WORKS Dear Policyholder, In 1931, Aldous Huxley wrote Brave New World. The novel spoke to government dominance and anticipated developments in technology and organizational structures that, when combined, profoundly changed society. We are coming to terms with this Brave New World where enormous opportunity converges with new client models and new client exposures. Fast forward to 2012/2013 and witness in healthcare our own Brave New World with comparable changes brought about by the Affordable Care Act and the imminent arrival of the Healthcare Insurance Exchange (HIE). Already we are seeing dramatic differences in your Company s client base (who we sell to), market models (new competition), broader product offerings required (Exposures) and client expectations from entities that are multi-line, multispecialty and multi-state. We are witnessing the rapid consolidation via acquisitions and mergers of physician practices by Healthcare Systems, Hospitals, Academic Medical Centers, Clinical Integrated Networks, large Specialty groups, and ACOs (both public and private). These new entities have greater expectations that address the broader needs of insurance in terms of exposures covered for these relationships. They are called Enterprise Liability Solutions and include, but are not limited to, D&O, E&O, Specialty Coverage, Managed Care Coverage, Facility coverage, RAC Audit coverage, HIPAA Coverage and CyberLiability to name just a few. These changes have also brought to the market new competition and new channels of distribution for our product lines. These groups want to benefit from this integration and network development by leveraging their own resources. There are banks that own medical malpractice companies, fund network development and provide treasury services to these new entities. There are Private Equity Funds and Venture Capital firms that own large portfolio companies comprised of physician practices(mso) and Hospital based service groups (ED, Anesthesia, Radiology, Hospitalists, Pathology) all of which are planning to participate in the HIE. Whether we are selling increased exposure solutions or selling existing exposures into larger entities these changes are affording your company the opportunity to grow competitively. While we are looking at a static market today, we face an organic market that is always changing. Continuing it s A Prime rating, in 2012 your company paid $1,000,000 in dividends. Statutory surplus grew by 4% promises to be a good year but also a different type of year in a different type of market environment. Your Board of Directors and Management Team are excited about your company s future. We appreciate deeply your support and loyalty that has helped your company continue to meet its promises and commitments to its policyholders/owners even in the most difficult economic circumstances. On a sad note, during 2012 Healthcare Underwriters Group lost its founding father and CEO, Steven Salman. A man with extraordinary vision, compassion and dedication, he is dearly missed by his team and the thousands of physicians that came to know him over many years. In the spirit of his commitment to all our policyholders your management team and Board of Directors are moving forward tirelessly with his vision; continuing to build and keep your company financially strong and exceptionally well managed. Like Steve, we always place our policyholders best interests above all else. Steven D. Shapiro, M.D. Healthcare Underwriters Group Chairperson Joshua M. Salman, MBA Healthcare Underwriters Group Chief Executive Officer

3 HUFL paid another $1,000,000 dividend in 2012, bringing the total dividends paid to $4,150,000 Cash and Invested Assets $41,696,870 Other Assets $1,568,002 Total Admitted Assets Statutory surplus increased by $900,000 in 2012 $6,374,905 Total Liabilities Direct Premiums Written $20,017,906

7 months or over 4 years of a 40 year career; the majority of which produce no indemnity payment.

4 BUILDING OUR REPUTATION BY DEFENDING YOURS PROBLEM On average, a physician can expect to have a claim every 7 years. SOLUTION HU retains only experienced attorneys whose specialty in the practice of law is medical professional liability defense. Average physician has a claim pending for a total of 50.7 months or over 4 years of a 40 year career; the majority of which produce no indemnity payment. HU spends substantially more on the cost of defending our physicians reputation than it pays in total indeminity to plaintiffs. Typically, malpractice claims are not filed until nearly two years after the original incident and are not resolved until nearly 4 years post incident. A Claims Committee that is comprised of practicing member physicians of various specialties review cases to determine whether a claim has medical merit. $200 Billion is spent on defensive medicine annually, which is a direct consequence of the current MedMal litigation system. Year-to-year, HU closes an overwhelming majority of cases where the insured physician has been exhonerated and no payment was made to the plaintiff or the plaintiff s attorney. *National averages based on data collected by Rand Corporation HUFL has a Financial Stability Rating (FSR) of A (A Prime), Unsurpassed, from Demotech, Inc.

Liability Claims closed without indemnity payment 1292% HUFL

26:1 Net Written Premium to Policyholder surplus (Industry

5:1) Trials to verdict Number of Owner/Policyholders by County

Owners/Policyholders 21+ Owners/Policyholders RISK MANAGEMENT

Liability Exposures HUFL s Risk Managmenet program has been

current and future risk but, also working to provide them with

changing the risk exposures that physicians are facing.

5 Liability Claims closed without indemnity payment 1292% HUFL Risk Based Capital vs. AM Best Composite of 1045%.26:1 Net Written Premium to Policyholder surplus (Industry Benchmark <1.5:1) Trials to verdict Number of Owner/Policyholders by County No Owners/Policyholders 1-10 Owners/Policyholders Owners/Policyholders 21+ Owners/Policyholders RISK MANAGEMENT Cyber Liability Electronic Medical Records General Professional Liability Exposures HUFL s Risk Managmenet program has been focused on not only increasing our policyholders awareness of current and future risk but, also working to provide them with the tools and resources to help identify the high risk areas of their practice. The goal is to help reduce the day to day medical practice operation liabilities. Claims Reserves $16 Million Technology The HiTech Act is changing the risk exposures that physicians are facing. They are being inundated with exponential amounts of data and information. New technology is changing the demographics of their practices as well as their relationships with their clients and colleagues. The technology department at HU works hand in hand with Risk Management to develop and provide the resources needed to help our policyholders understand the rapid changes in technology and reduce exposure.

YOUR HUFL LEADERSHIP TEAM Elected Board (The Subscribers Advisory Committee (Board) is comprised of actively practicing HUFL insureds/ owners.) Steven D. Shapiro, M.D. Chairperson Dermatology, Palm Beach Siva P.

D. Secretary Internal Medicine, Miami Kenneth J. Budowsky, M.D. Pediatrics, Hollywood James V. Talano, M.D. Cardiology, Naples Management Team (Experienced medical liability insurance professionals) Joshua M.

Goff, MS VP - Chief Sales/Marketing Officer Thomas W. Mueller, CPA, CGMA VP of Finance - Controller David W. McKenney Regional Vice President - Claims Theresa M.

6 YOUR HUFL LEADERSHIP TEAM Elected Board (The Subscribers Advisory Committee (Board) is comprised of actively practicing HUFL insureds/ owners.) Steven D. Shapiro, M.D. Chairperson Dermatology, Palm Beach Siva P. Bellam, M.D. Vice Chairperson Medical Oncology & Hematology, Port St. Lucie Edward J. Feller, M.D. President Gastroenterology, Miami Scot N. Ackerman, M.D. Treasurer Radiation Oncology, Jacksonville Alicia Rodriguez-Jorge, M.D. Secretary Internal Medicine, Miami Kenneth J. Budowsky, M.D. Pediatrics, Hollywood James V. Talano, M.D. Cardiology, Naples Management Team (Experienced medical liability insurance professionals) Joshua M. Salman, MBA Chief Executive Officer David W. Lester, CPA, CGMA VP - Chief Financial Officer Morton C. Bell VP - Chief Underwriting Officer William C. Ludwig, JD VP - Chief Claims Officer Ronald J. Goff, MS VP - Chief Sales/Marketing Officer Thomas W. Mueller, CPA, CGMA VP of Finance - Controller David W. McKenney Regional Vice President - Claims Theresa M. Zimmerman, RN, JD, ARM, CPHRM, DFASHRM Vice President of Risk Managment HUFL s best referrals come from its insured physicians. They know best who is qualified to share risk with them. If you would like to refer a physician, please contact Ronald Goff at rgoff@hugroups.com or at South Pine Island Road, Suite 300, Plantation, Florida Phone: Fax: rgoff@hugroups.com

A STORY OF STRENGTH; A PROVEN MODEL THAT WORKS

A STORY OF STRENGTH; A PROVEN MODEL THAT WORKS Dear Policyholder, There is an old saying that Storms make trees take deeper roots. Nothing could be closer to the truth in 2011. The external environment