Frequently Asked Questions

  1. How is Central Pennsylvania Physicians Governed? – Data and literature reveal that customized physician risk management techniques can enable Central Pennsylvania Physicians to reduce both the frequency and the severity of professional liability claims at the same time, enabling physicians to enhance their practice. This, in part, may account for the success of the program. Through rigorous underwriting, education, training, event management, and the support of Stevens & Lee’s risk management professionals, health care professionals can work towards achieving significant liability risk reduction both as to frequency and severity. Incentives between insurers and insureds are uniquely aligned. Severity is uniquely controlled. Central Pennsylvania Physicians is governed by a board of directors consisting of insured physicians and one statutory director from South Carolina. The directors are elected by the members to serve on rotating three year terms ensuring continuity and stability in corporate governance.
  2. What Advantage Does Physician Ownership Have? – Physician ownership is a core philosophy of Central Pennsylvania Physicians and an integral protection against the “sins of the past” that have helped create instability in the professional liability marketplace. Ownership by the policy holders ensures there is an immediate alignment of incentives when it comes to strategic decision making. Central Pennsylvania Physicians policy holders:
    • Elect the Board of Directors
    1. Control amendments to the bylaws (such as limiting the coverage area to Central PA)
    2. Realize profit (in the form of any dividends paid)
    3. Participate in the day-to-day operations of essential committees such as quality improvement, underwriting and claims.

    While the participation of members varies significantly, you are assured that your interests are being represented by your peers at every level of the organization.

  3. How is Central Pennsylvania Physicians Regulated? - Central Pennsylvania Physicians is regulated by the South Carolina Department of Insurance, a state recognized as a leading domicile for captive insurance companies such as Central Pennsylvania Physicians. South Carolina was chosen as the domical because of the strict regulatory environment they provide as opposed to many other states. Central Pennsylvania Physicians was formed to bring stability back to the professional liability market. A key component in achieving stability was ensuring efficient, yet effective oversight of the company. This oversight includes but is not limited to:
    1. An annual audit by an independent auditing firm
    2. An annual rate adequacy review
    3. An annual reserve adequacy review
    4. A tri-ennial organizational exam by the SC Department of Insurance
  4. Are there geographic limitations on who can be insured with Central Pennsylvania Physicians? – Yes. To be insured with Central Pennsylvania Physicians your office must be located in one of the following counties:

  1. How does Central Pennsylvania Physicians operate? – Central Pennsylvania Physicians is operated by professional advisors, and operational committees comprised of members of the board of directors, additional Central Pennsylvania Physicians insureds, and advisors from the professional service providers.
  2. What is the claims management philosophy of Central Pennsylvania Physicians? – Central Pennsylvania Physicians is committed to impacting risk POSITIVELY by being aggressive and attacking risk. The most cost effective manner in which to manage risk is to actively minimize risk through an effective and efficient process that identifies risk drivers, and takes proactive POSITIVE steps to abolish the issue. When an event does occur Central Pennsylvania Physicians works with you to reach an understanding between all parties involved. In cases where an event rises to the level of a claim or suit, Central Pennsylvania Physicians’s early intervention, providing immediate access to claims personnel and expert legal counsel, is pivotal in protecting you and your profession.
  3. I used to have access to an attorney for advice to guide me if a problem developed. Will I have that NOW with Central Pennsylvania Physicians? – Absolutely. It is an essential element of the program. For too long physicians have been told, perhaps with good reason, to avoid reporting situations to their insurance carrier for fear that they would be subjected to rate increases or worse yet, cancellation of coverage. Central Pennsylvania Physicians is changing the equation. Event management, and your open access to legal counsel to effectively and aggressively manage events WHEN THEY OCCUR, is an integral, mandatory component of the Central Pennsylvania Physicians process. It is best for you, it is best for Central Pennsylvania Physicians, and most importantly, it is best for your patients.
  4. What if I disagree with my attorney about settling a case. Who gets the final word? – Central Pennsylvania Physicians has ensured that your interests, both as an insured and an “owner” of Central Pennsylvania Physicians, are protected through the settlement policy. Central Pennsylvania Physicians’s settlement policy provides that claims against physicians will NOT be settled for economic or business reasons. Insureds are provided with an appeal process wherein if a disagreement on settlement occurs, the physician will have TWO opportunities to offer an explanation as to their belief that a case should or should not be settled. Both groups that would hear the appeal are comprised of your peers.
  5. What makes your approach to litigation better than what my colleagues have experienced in the past? – Many factors have enabled Central Pennsylvania Physicians to be uniquely positioned as your best line of defense. The programs integration of Risk Mitigation, Event Management, and Risk Litigation is a role model for best practices in managing professional liability claims. Employing cutting edge strategies in controlling and managing litigation, the attorneys at Stevens & Lee aggressively defend the interests of Central Pennsylvania Physicians insureds. This isn’t reactive participation in a suit. This is aggressive, proactive, cutting edge defense by attorneys experienced in representing physicians in professional liability claims in state and federal courts. Stevens & Lee has invested in resources to technology in the courtroom, a national network of experts, jury consultants, mock juries and more to ensure you receive the best defense possible.
  6. Is Central Pennsylvania Physicians’s policy on a “claims-made” or “occurrence” form? – Both! Central Pennsylvania Physicians is available in both a claims-made and an occurrence policy.
  7. Why have claims-made policies become so popular? – For insurance companies operating on a “claims-made” form provides greater predictability in rate setting than occurrence forms of coverage and has become the preferred form of coverage for professional liability policies. Nationally, over 75% of professional liability policies are now written on a claims made form. Central Pennsylvania Physicians have benefited from substantial cost savings by operating in a claims-made environment.
  8. Do I have to purchase an extended reporting period endorsement (tail) from my current carrier if I want to join Central Pennsylvania Physicians? – (Note: This question applies only if your expiring coverage is a “claims made” form of coverage). No, CPPRRG will utilize the same retroactive date as you have under your current policy. This will avoid the need to purchase an extended reporting period endorsement (tail). This “prior acts coverage” keeps claims made coverage in force by transferring the risk to CPPRRG. This is done at no additional cost by having CPPRRG rate your premium at the applicable maturity.
  9. Does Central Pennsylvania Physicians pay for hearing costs that arise out of Medical Licensing Board hearings? – Yes. In accordance with the terms and conditions of the policy, Central Pennsylvania Physicians will reimburse hearing costs for physicians scheduled under the policy for actions arising out of the providing or failure to provide professional services that would have been covered under the policy. The reimbursement is $10,000 per any one hearing, and $30,000 in aggregate.
  10. Are there other additions to the policy that are important? – Yes. The Central Pennsylvania Physicians also includes benefits such as:

    1. Payment of pre-judgment and post-judgment interest
    2. Bond premiums
    3. Reasonable costs incurred by the insured
    4. Defense costs of certain criminal charges
    5. Defense coverage up to $25,000 for Medicare/Medicaid billing actions
  11. Will CPPRRG insure my corporation? – Yes. Central Pennsylvania Physicians provides coverage for your partnership, joint venture, corporation, association, professional organization, or limited liability organization that is owned by one or more of the insured physicians. This coverage is available at 10% of the combined premiums of the practitioners insured under the policy.
  12. My current carrier allows me to pay on a quarterly basis. Are deferred payment options available with Central Pennsylvania Physicians? – Yes. Central Pennsylvania Physicians maintains a preferred relationship with a financial service provider to finance the capital contribution, annual premiums and the MCare assessment.
  13. Will I have to purchase an extended reporting period endorsement (tail) when I terminate coverage? – When a claims-made policy is terminated, coverage will cease. Insureds must either purchase an extended reporting period endorsement (tail) or obtain prior acts coverage from the new insurance carrier. Central Pennsylvania Physicians policy clearly states that an extended reporting period endorsement will be offered to any insured that terminates coverage.
  14. Are there situations where I would NOT be required to purchase a tail? – Yes, there are several scenarios:

    1. Practitioners who maintain uninterrupted coverage through Central Pennsylvania Physicians for 5 years, are over the age of 50, and retire from the practice of medicine are provided with a “tail” at no additional cost
    2. If you die, or become disabled and cease practicing medicine, your tail is provided at no cost to you (or your estate).
    3. If you elect to purchase “prior acts coverage” from your new carrier a tail would not be required.
  15. How is Central Pennsylvania Physicians regulated, and by whom? – South Carolina was selected as the state of domicile for Central Pennsylvania Physicians, and as such the Department of Insurance in South Carolina is responsible for regulation and oversight. Central Pennsylvania Physicians selected South Carolina because of their expertise, efficiency of operations, and rigorous standards for licensing a captive insurance company. Already Central Pennsylvania Physicians has been subjected to, and obtained excellent reports from:

    1. Three audits by an independent auditing firm
    2. Three rate adequacy reviews
    3. Three reserve adequacy determinations
    4. One organizational exam
  16. What has Central Pennsylvania Physicians trend been for premium increases? – Central Pennsylvania Physicians adjusts rates in July of each year. Since the inception of the program, rates where adjusted as follows:

    1. July 2003 - Original rates
    2. July 2004 - 7% increase for all insureds
    3. July 2005 - 7% increase for the program, spread across the specialties from 2.9% to a maximum 9.5%
    4. July 2006 - 3% increase for all insureds
    5. July 2007 - 5% increase
    6. July 2008 - 0% increase
    7. July 2009 - 0% increase and a $1,000,000 dividend distribution
    8. July 2010 - 0% increase and a $1,000,000 dividend distribution
  17. Are there thresholds or indices that a consumer can use to gauge the financial stability of an insurance company?
  18. Yes. The three common indices are:
    1. Premium to Surplus Ratio - Threshold is less than a ratio of three premium dollars for every one dollar of surplus
    2. Reserve to Surplus Ratio - Threshold is less than a ratio of five reserve dollars for every one dollar of surplus
    3. Loss to Surplus Ratio - Threshold is ten to one, or the ability to sustain greater than 10 full limit losses from surplus
  19. What if you’re wrong? What happens if claims are much more frequent than is anticipated? - Central Pennsylvania Physicians has the same remedy for increased claim volumes or higher than expected claim severity as every other carrier – premiums would be increased to fund for the losses.
  20. Does Central Pennsylvania Physicians participate in the Pennsylvania Property & Casualty Insurance Guaranty Association (PIGA)? - No. As a risk retention group, Central Pennsylvania Physicians neither pays into nor receives any benefit from the State Guaranty Fund. Central Pennsylvania Physicians founders believed and remain confident that the control, restricted geography, and efficiency of operating as a risk retention group far outweigh any perceived benefit of a limited backstop for insolvency such as the PIGA fund. Central Pennsylvania Physicians was built on a philosophy that individuals take better care of what they own than what they rent, that mandatory risk control achieves results, and that physicians understand that stability will only be achieved when the incentives of the carrier and the physician are aligned.
  21. How do I learn more about Central Pennsylvania Physicians? - Central Pennsylvania Physicians representatives are available to come to your office and provide a detailed presentation on the philosophy, structure, operation and success of the program. Group practices are encouraged to invite all shareholders to a meeting as well as other trusted advisors, such as your accountant or corporate attorney. You should plan on spending at least one hour for maximum benefit.