Liability Insurance Program Switches Carriers

Q. When will my policy be converted to the new carrier for the Psychiatrists’ Program, the APA-endorsed Psychiatrists’ Professional Liability Insurance Program (the Program)? How will I know when my policy is moved from Legion to the new carrier? Do I need to do anything at this time?

A. The Program has entered into an arrangement with two member companies of American International Group (AIG). Coverage will be issued through National Union Fire Insurance Company of Pittsburgh, Pa. (National Union) or Lexington Insurance Company (see Original article: page 2).

You will be notified in writing of the nonrenewal of your Legion policy. The options available to you to continue your coverage will be included in this notification. Please note that Legion continues to operate while under the rehabilitation order issued by the Pennsylvania Department of Insurance. Previously issued Legion policies currently remain in force (provided that premium payments are up to date).

Please do not hesitate to contact your underwriter at (800) 245-3333 for more information or visit the Participants’ Only section of the Program’s Web site at www.apa-plip.com. Professional Risk Management Services Inc. (PRMS) continues to update the question/answer section as details are finalized and more information becomes available. You can also e-mail PRMS regarding the conversion at [email protected].

Q. Will I still have access to the Risk Management Consultation Service (RMCS)?

A. Yes. All of the many services currently provided by PRMS remain a benefit of your participation in the Program. This includes the Risk Management Consultation Service, the quarterly newsletter Rx for Risk, risk management seminars, online insurance, and risk management educational services, to name a few.

Q. Is Legion Insurance Company insolvent?

A. No. Legion has not been deemed insolvent; the company is only in rehabilitation. Rehabilitation is a court-ordered action authorized under the insurance laws that appoints the state insurance commissioner as the “rehabilitator” over an insurance company. The rehabilitator will analyze the company’s financial position and determine what steps are feasible and necessary to correct the problems identified by the rehabilitator. During the process the rehabilitator gives priority to protecting the policyholders.

Q. What is the relationship between Legion and PRMS? Is PRMS insolvent?

A. Legion has been the Program’s carrier since 1988. In October 2000 APA sold PRMS to Legion Insurance Company (Psychiatric News, November 17, 2000). As a result of this sale, Legion became the sole shareholder of PRMS. However, PRMS still operates as its own corporation.

PRMS is not insolvent, and PRMS is not in rehabilitation. However, PRMS, as the manager of the Program for Legion Insurance Company, is required to manage it according to the terms of the court order that placed Legion into rehabilitation.

Q. I have an occurrence policy. If I have claims to report in the future, will these claims be covered by Legion?

A. So long as Legion remains in rehabilitation, claims will be handled according to the terms of your insurance policy, although payment of claims may be delayed. PRMS is working with Legion and the Pennsylvania Insurance Department to try to ensure continuity of coverage. Please contact PRMS to discuss specific concerns regarding this issue. PRMS understands the concerns of the APA membership and will strive to protect their interests by investigating all possibilities as Legion’s situation develops.

Q. Why are rates increasing, and will they increase in all states?

A. Rates are increasing as part of an industrywide trend. While other companies were raising premiums in recent years, the Program maintained its rates for more than four years. However, The Program’s own experience, along with a variety of industrywide conditions (rising jury verdicts, low interest rates, a tumbling stock market, and the insurance challenges caused by the terrorist attacks last year), has required the Program to make a rate adjustment. The amount of the rate increase will vary by state but we are anticipating approximately a 30 percent rate increase.

Professional Risk Management Services is the manager of the Psychiatrists’ Program, the APA-endorsed Psychiatrists’ Professional Liability Insurance Program. The Program’s carriers are rated A++ by A.M. Best. More information on the Program is available by calling (800) 245-3333, ext. 389, or visiting the Web site www.apa-plip.com. ▪

This column is provided as a service to the membership by the Psychiatrists’ Program, the APA-endorsed Psychiatrists’ Professional Liability Insurance Program. Send your questions to [email protected].