THE mark of a LEADER P r o f e s s i o n a l s A d v o c a t e A n n u a l R e p o r t

Transcription

1 THE mark of a LEADER Professionals Advocate Annual Report 2014

2 wear by Apollo the physician, and Aesculapius the surge kewise Hygeia and Panacea, and call all the gods and godd witness, that I will observe and keep this underwritten oa he utmost of my power and judgment. will reverence my master who taught me the art. Equally th my parents, will I allow him mark things necessary for his THE pport, and will consider his sons as brothers. of I awill teach m my art without reward or agreement; and I will imp my acquirement, instructions, and LEADER whatever I know, to aster's children, as to my own; and likewise to all my For thousands of years people have depended on pils, who shall bind and tie themselves by a professional h, but to none else. signs to identify a leader. From rings and crowns and scepters, to wax seals with the King s mark placed on important documents, these have served as reassurances of authenticity and superiority. This Annual Report ith regard to healing the features sick, our I mark, will the Professionals devise and Advocate order logo, for th symbolically placed in a seal on the cover of the report. best diet, according to my For judgment the many Doctors who and have means; chosen us for and their I w ke care that they suffer professional no hurt liability or insurance damage. over the past 25 years, it represents the Mark of a Leader. r shall any man's entreaty prevail upon me to adminis ison to anyone; neither will I counsel any man to do so. oreover, I will give no sort of medicine to any pregnant man, with a view to destroy the child. rther, I will comport myself and use my knowledge in a

3 a letter to our INSUREDS Doctors are the keystone of health care. Patients turn to them to relieve suffering, offer support and provide leadership. Part healer, part counselor, Doctors use their hard earned knowledge and skills, knowing that every decision they make could critically impact their patient s well being. When it s time to make difficult decisions, Doctors ensure that a full range of treatment is considered, whether curative, preventive, rehabilitative or palliative, to meet the medical, emotional and social needs of the patient. This is a Doctor a strong leader guiding a patient s health care choices. And when Doctors want a strong leader protecting their practice and career, they turn to Professionals Advocate. Doctors know that our claims operation is nationally respected for its aggressive claims defense. Our Risk Management education program is one of the area s largest. We offer a variety of insightful inperson, print and online programs to provide the timely information necessary to improve patient care and minimize liability risk. Our responsive Customer Service department focuses on delivering a consistent, high quality level of service. ProAd is also a leader behind the scenes. We were founded by the Medical Mutual Liability Insurance Society of Maryland, the nation s oldest Doctor owned and directed liability insurer. ProAd inherited a wealth of experience from seasoned and highly skilled insurance professionals. We know your world is constantly evolving, and we continually strive to adapt our services, coverages and technology to meet your changing needs. To that end, we recently included e-dataresponse privacy breach coverage in the professional liability coverage of our Virginia Physicians to help address liability risks posed by storing protected personal information. Financially, Professionals Advocate is strong and stable. For the 11th consecutive year, A.M. Best, the nation s leading independent ratings agency, rated us A- (Excellent) because of our excellent financial results and stability. We are proud of our accomplishments as a leader in the professional liability insurance industry. For thousands of years leaders placed their mark in a seal on important documents as a sign of authenticity, superiority and strength. This Annual Report features our mark, the Professionals Advocate logo, symbolically placed in a seal on the cover. For the many Doctors who have chosen us for their professional liability insurance over the past 25 years, it represents the Mark of a Leader. But, just as you never stop growing as a leader in health care, we continue to build on our strengths as an insurance leader. Thank you for giving us the opportunity to help you manage the health care and insurance challenges of the future. Sincerely, George S. Malouf, Jr., M.D. Chair of the Board Jeffrey M. Poole, MBA, CPCU President & Chief Executive Officer

4 the mark of a leader Aggressive Claims Defense In today s litigious society, even the most competent and skilled Doctor can be served with a claim or lawsuit. In the event of a medically defensible claim, Professionals Advocate strives to ensure that the integrity of your practice and professional reputation remain intact. We do this with a team-based and aggressive approach to the defense and resolution of claims. The final result is the successful resolution of the majority of the claims that go to trial. Our claims strategy Our claims representatives are actively involved for the duration of the claim. We work only with top local defense attorneys specializing in medical malpractice litigation. Litigation education and support are provided for Insureds throughout the process. 4

5 the mark of a leader TIMELY RISK MANAGEMENT The best way to defend yourself from the threat of a claim or lawsuit is to be proactive. ProAd s comprehensive risk management programs and services are specially designed to help Doctors identify and address preventable issues before they escalate into potentially serious legal action. Live Support for Your Risk Management Needs When you have an urgent risk management question, time is of the essence. ProAd s risk management department includes experts with extensive medico/legal backgrounds. These specialists are ready to provide personalized support and practical advice on any potential liability concerns you may have. Reduce Your Risk Education programs are focused on current medical and dental issues that affect Doctors day-to-day. Doctors RX, our risk management publication, examines important issues in the world of medicine. Web-based risk management tools offer resources on a variety of topics. On-site consultations and assessments provide ways to improve patient care, communication and other practice issues. 5

6 the mark of a leader Comprehensive Coverages ProAd offers a variety of high quality professional liability insurance products for health care providers. These coverages include many extras, such as prior acts, free tail provisions, risk management premium credits and more. ProAd MedGuard, our recently enhanced administrative disciplinary review defense coverage, pays the costs of defending you against certain administrative hearings. MedGuard also includes e-dataresponse privacy breach coverage. The more robust e-dataresponse+ is an optional standalone product that provides essential coverages related to the breach of electronic or paper records.* *Not all products, specific product features, and specific services are offered in all locations. Please check with your local ProAd broker or agent for complete information on the policies and coverages available in your area. 6

7 the mark of a leader Exceptional customer service Few areas define an industry leader as much as the quality of its customer service. As our corporate mission proudly states, Professionals Advocate is committed to providing a boutique level of personalized service. A Doctor s day is hectic and fast-paced. We know the importance of your time, and so we strive to offer you the insurance industry s gold standard of timely, personal and knowledgeable service. Rest assured, we are committed to providing you with the information you need, when you need it. depend o n P r o A d Customer Service Representatives for: Friendly, helpful attitude Good listening skills Knowledgeable answers Individualized service Respect for your time Prompt response to your requests Consistent follow-up Attentiveness to your feedback 7

8 the mark of a leader STRONG & STABLE FINANCIALS One of the most important requirements for any liability insurer is to remain financially strong and stable. Because claims can take years to resolve, Doctors need to be confident that their insurer will be available for the defense of their practice, both now and in the future. For the 11th consecutive year, Professionals Advocate earned an A- (Excellent) rating from the A.M. Best Company, the nation s leading independent insurance rating agency, in recognition of our balance sheet strength, operating performance and overall business profile. ProAd has the financial resources necessary to protect our Insureds and their practices. 8

9 the mark of a leader doctor-owned A COMMITMENT TO YOUR NEEDS Every day, Doctors face special concerns and extraordinary conditions. Finding the balance between running a successful private practice and staying abreast of the constant change in their field can be a massive challenge. They need an insurer that can fully appreciate the unique circumstances that they face and respond accordingly. That s why Doctors depend on Professionals Advocate to protect their practice and professional reputation. ProAd is a subsidiary of M edic al Mutual, one of the oldest and most respected Doctor-owned professional liability insurers in the country. From our parent company, we have inherited their unique, Doctor-oriented perspective. We understand the challenges of running a modern practice and share your dedication to quality health care. 9

10 the mark of a leader LOCAL SERVICE & ADVOCACY Because of the active local Doctor involvement in our company, ProAd has in-depth understanding of patient care and Doctor issues. We work tirelessly to ensure legislators fully appreciate the importance of these topics and how they relate to your need for quality professional liability insurance. Promoting Meaningful Change Professionals Advocate has taken a strong role in working towards a more positive legal environment for Doctors in Virginia and Maryland. Side-by-side with your Physician and Dental organizations, we endeavor year-round to make sure your voice is heard and your concerns are addressed. The Local Company You Can Depend On ProAd has dedicated offices in Virginia and Maryland. Local Doctors serve on our Board of Directors. Our Claims Committee receives guidance from local Doctors. Local Doctors help to create and teach our risk management education programs. 10

11 the mark of a leader INNOVATIVE TECHNOLOGY Professionals Advocate is an industry leader in the use of technology, offering mobile apps and mobile friendly web sites for both Physicians and Dentists. These mobile services offer you a streamlined web experience and 24/7 access to our services when you need them most. In addition, our already robust web site received several new sections this year, increasing the amount and types of information available to you, all in one convenient location. ProAd is also using technology to optimize our efficiency and work smarter for the Doctors we serve. A recent paperless initiative undertaken by the company has helped to not only reduce waste, but also to make interactions with our Insureds quicker and more convenient. New Web Services Our HIPAA Resources section offers information on HIPAA policies and compliance. The Claims Portal is a secure site with detailed information specific to a Doctor s claim.* A dedicated site for Practice Managers includes specialized resources and information, as well as a forum for communicating with other Practice Managers and ProAd Risk Management staff. *For claims after 1/1/15 11

12 FINANCIAL STATEMENTS Balance Sheets Professionals Advocate Insurance Company (Statutory Basis) December Admitted Assets Cash and short-term investments $ 6,228,423 $ 4,620,873 Long-term invested assets 112,847, ,817,723 Other assets 10,468,912 7,936,141 TOTAL ADMITTED ASSETS $ 129,545,087 $ 125,374,737 Liabilities and Policyholders Surplus Reserve for losses and loss adjustment expenses, net of reinsurance recoverable $ 12,546,412 $ 15,058,900 Reserve for unearned premiums 8,377,090 8,775,158 Deposits received on policies not in force 5,318,451 5,824,543 Ceded reinsurance balances payable 840, ,299 Other liabilities 1,673, ,948 TOTAL LIABILITIES $ 28,755,694 $ 30,992,848 TOTAL POLICYHOLDERS SURPLUS $ 100,789,393 $ 94,381,889 TOTAL LIABILITIES AND POLICYHOLDERS SURPLUS $ 129,545,087 $ 125,374,737 Statements of Income Professionals Advocate Insurance Company (Statutory Basis) Year Ended December Premiums earned $ 5,722,733 $ 6,007,305 Losses and loss adjustment expenses incurred 621, ,393 Underwriting expenses (1,110,595) (3,317,347) NET UNDERWRITING GAIN $ 6,211,998 $ 8,434,259 Net investment income earned and realized capital gains and losses 3,086,611 3,035,350 Other expense (146) (197) INCOME BEFORE FEDERAL INCOME TAX $ 9,298,463 $ 11,469,412 Federal income tax 2,743,417 3,548,004 NET INCOME $ 6,555,046 $ 7,921,408 12

13 FINANCIAL notes Organization Professionals Advocate Insurance Company is a wholly-owned subsidiary of Medical Mutual Liability Insurance Society of Maryland. Basis of Presentation The accompanying condensed financial statements of Professionals Advocate Insurance Company have been prepared in conformity with accounting practices prescribed or permitted by the Maryland Insurance Administration. The Maryland Insurance Administration requires insurance companies domiciled in Maryland to prepare their statutory basis financial statements in accordance with the National Association of Insurance Commissioners (NAIC) Accounting Practices and Procedures Manual. The preparation of financial statements of insurance companies requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known which could impact the amounts reported and disclosed herein. Significant Accounting Policies Investments Investments in bonds are reported at the lower of amortized cost or fair value based on their NAIC rating. Short-term investments, consisting primarily of Government Money Market Funds and Government Agency Discount Notes, are carried at cost which approximates market value. Losses and Loss Adjustment Expenses The reserves for losses and related loss adjustment expenses are estimated from actuarial analyses. These reserves include estimates of future trends in claim severity, claim frequency and other factors, which could vary as the losses are ultimately settled. Although the degree of variability inherent in such estimates can be significant, management believes that the reserves for the losses and related loss adjustment expenses reflect its best estimate of the amounts to be paid. The estimates are continually reviewed and, as adjustments to the reserves become necessary, such adjustments are reflected in current operations. Premium Revenue Premiums are recognized as revenue over the term of the policies. The primary source of premium revenue is derived from professional liability insurance for health care providers. Unearned Premium The reserve for unearned premium primarily consists of the pro-rata portion of premium for the remainder of the policy term as well as the provision for waiver of premium for extended reporting period endorsements on certain claims-made policies. Reinsurance Professionals Advocate Insurance Company has entered into reinsurance agreements with various unaffiliated reinsurers in order to reduce its ultimate claims risk. In addition to external reinsurance, intercompany reinsurance agreements are in place between the two insurance companies to spread risk and exposure across the larger financial base. Audited Financial Statements The 2014 and 2013 condensed financial statements of Professionals Advocate have been prepared in conformity with accounting practices prescribed or permitted by the Maryland Insurance Administration. The condensed financial statements have been derived from complete statutory-basis financial statements, which were audited by our independent auditors. A complete set of audited financial statements may be obtained upon request. 13

14 proad BOARD :: Officers :: committees Board George S. Malouf, Jr., M.D., FACS Chair of the Board, Physician in Comprehensive Ophthalmology in Montgomery and Prince George s Counties, Maryland Jeffrey M. Poole, MBA, CPCU President and Chief Executive Officer, Professionals Advocate Insurance Company Mary Lura Duvall, CPA Senior Vice President, Chief Financial Officer and Treasurer, Professionals Advocate Insurance Company David A. Ellington, M.D., FAAFP Family Physician in Lexington, Virginia Karen H. Klocko, D.D.S. Dentist in Gambrills, Maryland Martin A. Levin, D.D.S. Periodontist in Baltimore, Maryland John W. McCullough, CPA Retired Partner with the international accounting firm of Ernst & Young, LLP Donald M. Switz, M.D. Gastroenterologist and Professor of Medicine at The Medical College of Virginia in Richmond, Virginia Richard A. Walker, CPCU Retired Senior Vice President Marketing, Professionals Advocate Insurance Company ELIzABETH H. WATTS, M.D. Pediatrician in Vienna, Virginia Officers George S. Malouf, Jr., M.D. Chair of the Board Jeffrey M. Poole President and Chief Executive Officer Mary Lura Duvall Senior Vice President, Chief Financial Officer and Treasurer Keith P. Allen Senior Vice President Actuary Cheryl F. Matricciani Senior Vice President Underwriting Operations, General Counsel and Secretary Beth A. Atwell Vice President Claims Operations John H. Clifton Vice President Claims Steven P. Keuler Vice President Controller and Assistant Treasurer Gail M. Sconing Vice President Reinsurance and Policy Information Elizabeth A. Svoysky Vice President Risk Management John R. Franklin Assistant Vice President Communications Benjamin C. Rohm Assistant Vice President Underwriting Committees Audit Committee John W. McCullough, Chair George S. Malouf, Jr., M.D., ex officio Jeffrey M. Poole, ex officio Claims Committee Donald M. Switz, M.D., Chair George E. Broman, Jr., M.D. David A. Ellington, M.D. Kent R. Folsom, M.D. Michael H. Goldman, M.D. Jeffrey L. Henke, M.D. Carol S. Shapiro, M.D. Richard A. Szucs, M.D. David T. Waddell, M.D. George S. Malouf, Jr., M.D., ex officio Jeffrey M. Poole, ex officio Executive Committee George S. Malouf, Jr., M.D., Chair David A. Ellington, M.D. Jeffrey M. Poole Finance and Budget Committee David A. Ellington, M.D., Chair Martin A. Levin, D.D.S. John W. McCullough Mary Lura Duvall George S. Malouf, Jr., M.D., ex officio Jeffrey M. Poole, ex officio Independent Auditors Ernst & Young LLP, Baltimore, Maryland 14

15 ABOUT PRofessionals ADvoCATE A Leading Provider Professionals Advocate Insurance Company, or ProAd, is a leading provider of innovative and affordable professional liability insurance solutions to the health care community. ProAd is a subsidiary of the M edic al Mutual Liability Insurance Society of Maryland, one of the nation s oldest and most respected Doctor-owned and directed professional liability insurance companies. Our skilled legal, insurance and health care experts will defend your professional reputation and practice and provide you with security and peace of mind. Our Mission To provide insurance and related products, together with a boutique level of customized products and personalized service, primarily tailored to meet the needs of health care professionals. Our Vision We will be a highly regarded regional company, known for providing superior products and services. As an ultimately Doctor-owned company, we will serve as a strong advocate for health care professionals in the liability arena. We will be the best choice for health care professionals and their organizations, providing the best resolution of claims through a proactive and vigorous defense. Home Office 225 International Circle Box 8016 Hunt Valley, Maryland toll free Virginia Office 804 Moorefield Park Drive, Suite 105 Richmond, Virginia toll free toll free Complete corporate information is available on our web site at: proad.com THEmark of a LEADER 15

16 mark of a LEADER THE web Phone For more information on QR Codes, visit proad.com/qrcodes 225 International Circle, Box 8016 Hunt Valley, Maryland proad.com 2015 PROFESSIONALS ADVOCATE INSURANCE COMPANY. All Rights Reserved