R. Austin Wallace, MD
Chairman, President and CEO

Letter from the ChairmanMay 2019

"Buyer Beware"

On several past occasions in these pages, I have stressed the peril of choosing a medical liability insurance carrier based only on price (i.e. lower premiums), almost to the point of seeming to be a broken record. We all know the history of medical malpractice insurance companies coming into our state and then becoming insolvent due to insufficient premiums (ICA and PIE, for example,) or beating feet out of here when the going got tough (St. Paul and CNA). Indeed, because our hard-fought and hard-won medical liability civil justice reforms have worked well, competition has come into our state, which is certainly a healthy thing. However, some carriers have used a strategy of unsustainable low premiums in an effort to gain a foothold, and as I said on a number of occasions, if something is too good to be true, it probably is. Indeed, my fears have come to fruition, as one such carrier, Capson, was been placed in rehabilitation earlier this year by the Texas Department of Insurance, its state of domicile. Due to this action and the seriousness of Capson’s financial condition, the West Virginia Insurance Commissioner suspended Capson’s Certificate of Authority, thereby prohibiting Capson from insuring physician medical professional liability in our state. Unfortunately, some West Virginia physicians have been caught up in the chaos created by this action because they had previously decided to leave the Mutual and become insured by this company, sometimes even while knowing that the company’s finances were in shambles. As a former privately practicing Otolaryngologist, I certainly understand the desire to keep overhead as low as possible in our medical practices because of the increasing challenges in the business of medicine, but, as I have stated repeatedly, skimping on medical liability insurance is quite hazardous and has, indeed, proven to be quite detrimental to those affected in this case. Now, previous Capson insureds are reportedly being encouraged to purchase medical liability insurance through an excess and surplus lines carrier.

Again, buyer beware. Excess and surplus lines carriers are not admitted in the state of West Virginia, which means that these companies are not regulated by our state Department of Insurance and, therefore, are not subject to rate review. Furthermore, these companies’ policyholders are not eligible to participate in the state guaranty fund, which protects an insured if the company becomes insolvent with a total of $300,000 of coverage. This is obviously significantly less coverage than the amount that would have been available in the policy had the company been able to continue in business, but it is certainly better than nothing (which is the case when insured by an excess and surplus line company.) Furthermore, should a physician retire or move, most excess and surplus lines companies offer and charge for what turns out to be only limited tail coverage both in duration and amount, whereas admitted medical malpractice insurance carriers offer tails without time limits. Indeed, if a physician retires after having been insured by the Mutual for five years or longer, the tail coverage is without charge.

I obviously continue to believe that the West Virginia Mutual Insurance Company far and away offers the best option for your medical professional liability coverage in our state, even when our premiums may, by necessity, be a little bit higher than those of certain competitors, especially in view of what has happened as described above. Please be reassured that our rates are realistically and actuarially determined based on what is actually happening in our region, and if our experience is more beneficial than projected, as it was last year, then dividends will be given to our owners (you, our policyholders.) It should be great comfort to you that we have been and continue to be Physicians Insuring Physicians.

R. Austin Wallace, M.D.