Policyholders with Chiropractic Benefit Services (CBS) have found themselves moving from carrier to carrier an average of every two years; some of CBS' recent carriers haven't even lasted that long.
CBS moved its policyholders to the TIG Insurance Group (TIG) in November 2000 as its previous carrier, Reliance, was sliding into bankruptcy.1,2,3 When TIG's rating began to fall a year later,4 CBS went looking for another carrier and found Lumbermans, part of the Kemper Insurance Companies (Kemper). Unfortunately for CBS policyholders, the move to Lumbermans/Kemper in October 2002 was a move to yet another carrier with falling ratings.5,6
On March 14, 2003, A.M. Best Co., again downgraded TIG, this time from a "B++" rating to "B+." TIG still provides malpractice insurance to approximately 60 percent of CBS' policyholders - those who purchased or renewed their policies prior to CBS' switch to Kemper/Lumbermans in October 2002. According to an A.M. Best press release, "The lowering of TIG's financial strength rating reflects the ultimate run-off nature of the restructured operation."7
TIG is no longer renewing CBS policyholders; they must be insured by another carrier.
Kemper, the carrier CBS moved to in October 2002, also is not renewing CBS policies. Kemper's board of directors made the decision on March 4, 2003, after A.M. Best downgraded Kemper/Lumbermans from "B+" to "B."6,8,9
According to a Kemper representative, "Chiropractic malpractice insurance will no longer be offered by Kemper. Kemper will not be renewing the chiropractic professional liability (malpractice) policies."10
TIG's "B+" rating and Kemper's "B" rating compare poorly in the chiropractic market. Every other chiropractic malpractice carrier is sporting an "A-" rating or better.11
CBS tried to assure its policyholders in a broadcast e-mail dated March 21, 2003, stating that: "Kemper will take care of claims against any CBS occurrence policies it issued." (emphasis added). While this may be comforting for a small portion of CBS policyholders, the vast majority purchase claims-made policies.
This begs the questions as to whether CBS' claims-made policyholders should now buy a tail (an additional insurance policy that will cover any claims that occur after their claims-made policies have expired - usually at a cost of twice the annual premium rate). If so, there could be additional problems for doctors in some states, because not all states require a company to sell a "tail" to their claims-made insureds. (Florida is a good example of a state that does not require such a policy.)
However, the most pressing issue facing CBS policyholders is that of renewal. Those coming up for renewal can't stay with TIG and can't go to Kemper.
Given the condition of the current insurance market, and the fact that CBS has already left seven previous carriers, CBS may not be able to find a new carrier right away. To stay alive, CBS could be forced to place its policyholders with an "off-shore" carrier who would not be subject to the U.S. insurance laws designed to protect policyholders.
As of press time, CBS has yet to announce who its new carrier will be.
References
- Reliance mulls bankruptcy. Aug. 15, 2000. CBS MarketWatch.com (www.cbsmarketwatch.com).
- Reliance group ratings fall as bankruptcy looms. Nov. 1, 2000, Reuters.
- Bankruptcy looms for Reliance/CBS: CBS malpractice insureds exposed. Dynamic Chiropractic Nov. 30, 2000. www.chiroweb.com/archives/18/25/18.html.
- A.M. Best downgrades rating of TIG; affirms rating of Crum and Forster; affirms ratings of Fairfax and its subsidiaries. Press release, Nov. 30, 2001.
- A.M. Best lowers rating of Kemper Insurance Companies intercompany pool. Press release, A.M. Best Company, Dec. 24, 2002.
- A.M. Best lowers rating of Kemper, assigns rating to surplus notes. Press release, A.M. Best Company, May 7, 2002.
- A.M. Best affirms financial strength ratings of Fairfax's insurance subsidiaries; lowers debt ratings of Fairfax Financial. A.M. Best Company, March 14, 2003.
- Kemper's 2002 results deteriorate. press release, Kemper Insurance Companies, March 4, 2003. www.kemperinsurance.com/about/presslease_03042003_b.html.
- Kemper/Lumbermans pull out of chiropractic malpractice. Dynamic Chiropractic April 7, 2003. www.chiroweb.com/archives/21/08/09.html.
- Phone interview with Kemper representative, March 6, 2003.
- Chiropractic malpractice insurance: Who's left? Dynamic Chiropractic Sept. 1, 2002. www.chiroweb.com/archives/20/18/19.html.
