For Immediate Release
February 14, 2003
Florida Risk Retention Group Formed To Provide
Liability Insurance To Long-Term Care Facilities
A Risk Retention Group (RRG) has been formed in Florida to meet the critical need for liability insurance to cover long-term care facilities, Tal P. Piccione, Chairman of Uni-Ter Underwriting Management Corporation (UUMC), Atlanta, GA, announced today. Mr. Piccione also is Chairman and CEO of U.S. RE Companies, Inc., New York, NY, UUMC's parent.
The Florida Long-Term Care Risk Retention Group, Inc. (LTCRRG) will provide General and Professional Liability insurance protection to skilled nursing, assisted living, and independent living facilities. The Group expects to cover facilities containing 10,000 beds in the first year of operation. LTCRRG is a stock insurance company created under the Federal Risk Retention Act of 1986 and operating with a Certificate of Authority granted by the Florida Department of Insurance on January 30, 2003.
"We're pleased to create an insurance company in partnership with the State of Florida that will help relieve the crisis in long-term care liability insurance as traditional carriers continue to abandon the Florida market," said Mr. Piccione. UUMC organized the Risk Retention Group in cooperation with State agencies and operators of long-term care facilities. The RRG will be owned by its policyholders and operated by UUMC under a management contract.
"Virtually no admitted insurers remain that are willing to write this business, and then only under onerous terms requiring dramatically reduced coverage and increased prices. Through the RRG, we're helping the operators of long-term care facilities take control of their destiny by creating their own insurance vehicle," Mr. Piccione explained.
The RRG is capitalized with an interest-free Surplus Note of $6 million from the Florida Agency for Health Care Administration. The note will be repaid by the RRG from capital contributions of shareholders. Initial capitalization exceeds the minimum amount of $5 million required by the Department of Insurance to launch operations.
Under the law all insured facilities must hold stock in the RRG. As shareholders they will make equity contributions to capitalize the RRG. Skilled Nursing Facilities will invest $780 per insured bed to be paid in declining installments over three years. Assisted Living Facilities will be eligible for coverage with a capital contribution of $212 and Independents will contribute $148 per bed to be paid over three years in declining installments.
The RRG will be restricted to writing specialized liability coverage on a claims-made form under the Medical Malpractice and Other Liability lines of insurance. Limits of $250,000 per occurrence with an aggregate of $500,00 will be offered. The average premium for Skilled Nursing Facilities will be $1,049 per bed for the first year escalating to $1,449 in the third year and thereafter. The Assisted Living and Independent Living facilities will pay lower premiums based on lower risk.
Sanford D. Elsass, President and Chief Executive Officer of UUMC, said Uni-Ter will provide all management and administrative services to the RRG except for investment management. Uni-Ter will be responsible for underwriting, policy administration, marketing, billing, collection, claims administration, risk management, accounting, financial and regulatory compliance, information technology, and other administrative services. PMG Advisors, LLC, of West Conshohocken, PA, will provide investment management and advisory services.
"Meaningful risk management will be a critical element of our program to reduce the frequency of incidents and hold down the cost of insurance to RRG policyholders," Mr. Elsass said. Uni-Ter will handle all claims through its experienced claims administration company, Uni-Ter Claims Services Corporation, a national Third Party Administrator for professional liability claims.
"Our mission is to fill the gap in availability of liability insurance for long-term care facilities, make insurance coverage affordable, provide strong risk management services that will improve the quality of care and reduce claims costs, and operate at a profit so the RRG can provide a stable, sustainable market for its shareholders," Mr. Elsass explained.
UUMC is a nationally recognized specialist in property/casualty insurance for long-term care facilities. The Company currently writes liability insurance for health care facilities in 22 states and is expanding its network of agents in those states. Uni-Ter also is involved in captive formation and risk management for health care facilities.
Mr. Elsass said New Office Business Systems Managers, Inc., of Rockledge, FL, will provide back-office support services to Uni-Ter. Auditing services will be provided by Deloitte & Touche, Jacksonville, FL and reinsurance brokerage services by U.S. RE Corp. New York, NY, a subsidiary of U.S. RE Companies, Inc., Uni-Ter's parent. The U.S. RE Group of Companies provide reinsurance and wholesale brokerage services, alternative risk financing and securitization, underwriting management, captive insurance facilitation, and venture capital investments in insurance related properties.
