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cap today

November 2005

Feature Story

Ed Finkel

By striking a deal with broker Aon Affinity Insurance Services, the CAP has woven back together what had been an increasingly patchwork quilt of professional liability insurance coverage options.

The College is now providing through Aon a free consultation and liability insurance options in all 50 states for the first time in several years. The College had been able to offer coverage in only about 16 states through its previous broker, JLT, which worked exclusively with The Doctors Company, says Edward P. Fody, MD, chair of the CAP Insurance Subcommittee.

“There’s no one universal carrier for the country,” explains Dr. Fody, a pathologist at Holland (Mich.) Community Hospital. “We were unable to find any carrier that would write coverage on a nationwide basis and offer discounts to our members.”

That’s because the insurance market “varies tremendously” from state to state, he says. “We have a broker who has expertise in placing physicians in every state and will work with our members to see that they get insurance, no matter where they’re located...That was a major priority of the Insurance Subcommittee in accepting a new broker.”

Calvin Johnson, president of Affinity Healthcare, says his company will provide “due diligence” in helping CAP members sift through their options. “Affinity has national market knowledge of the carriers who write coverage in all states and can work with CAP members to consult on their current program, give them an overview of the market options available to them in their own states, and potentially get them proposals for alternative options that may improve pricing.”

Johnson adds that some members will opt to stay with their current carrier. “We don’t have a turnkey solution for everybody,” he says of Aon, which has helped insure more than 19,000 doctors. “We can’t get everybody a cheaper price. I want to make sure everybody understands what I mean when we say ‘brokerage services.’”

“We have access to all the different insurers or carriers,” says Cheryl Hood, senior vice president of medical doctor programs at Aon Affinity, which the CAP selected from among four brokerage companies interviewed face to face, including JLT Service Corp., Marsh Affinity Group Service, and Pearl and Associates.

“Our job is to be their advocate, to find the best possible value for their insurance dollar,” Hood says. “In some instances, they may already be with the best carrier, in which case we would then either try to make sure they’re getting all the credits their carrier would offer them, or...if they have an issue where they don’t feel like they’re getting good service, we would be more than happy to become their broker.”

Dennis G. O’Neill, MD, chair of the CAP Membership Committee, says the previous arrangement with JLT and The Doctors Company had worked nicely 15 or 20 years ago but had become less and less helpful for CAP members.

“As time went on and the premiums went up, The Doctors Company became less and less attractive,” he says. “What we were being told was having an exclusive provider was too limiting, particularly when that pro vider started raising premium rates.”

Aon Affinity specializes in medical malpractice, Hood says. “That’s all we do,” she says. “JLT did not have that expertise. They also did not have access to all the markets we have access to; we have access to both the standard and nonstandard markets, regional carriers and national carriers...We also have regional expertise, which means the folks they would be talking to understand their marketplace. We specialize not only in med mal, but in what’s going on in your particular region or territory.”

Aon Affinity divides its regions into seven: West, Northwest, Midwest, Northeast, Mid-Atlantic, Southeast, and Oklahoma.

As a result, says Dr. O’Neill, a pathologist at Manchester (Conn.) Memorial Hospital, members will be able to access the best product available in their states and regions for their type of practice. “We asked Aon to explore this market for us, not in terms of finding an exclusive provider but regional or even state providers,” he says. “This is a customized approach to medical liability insurance. That’s the take-home message: Aon’s job is to find the best insurance available for that particular member.”

That insurance might be the one the pathologist or practice already has, in which case Aon will simply say so—and will not earn a commission, he says. “Aon could say to me, ‘In Connecticut, you’ve got two choices, and you’ve [already] got the better one for you,’” Dr. O’Neill says. “That’s OK. At least I’m reassured. Or they could say, ‘We’ve got quotes from another vendor.’ That’s the approach I would want, for the College to give me some guidance. If I’ve got the best rate, they’ll tell me I’ve got the best rate. If they can do something better for me, they’ll recommend another vendor.”

A member might want to call Aon and ask, “Am I with the right carrier? Do I have the right coverage?” Hood says. “As their advocate, we would be happy to review that for them. They need to understand that, being an endorsed broker, we don’t have a particular carrier that we are going to send them all to. What we have is the whole realm of insurance carriers that we can approach to find the best value.”

“There’s a whole mishmash of insurance companies out there,” says Robert Breckenridge, MD, member of the CAP Board of Governors and pathologist at MAWD Pathology Group, Kansas City, Mo. “We think it’s a good deal, especially for solo practicing pathologists. They know there is somebody who can answer their questions, give a realistic opinion of what is available, [and] provide services without the pathologist having to spend a lot of time having to do that on his or her own.”

Hood says that Aon Affinity won’t necessarily make money on everyone who approaches them for service and that the College definitely will not. “The main thing we’re offering to members is a true service,” she says. “We’re not necessarily going to be making money on the deal. I want to stress that CAP is not getting anything from this. The College is not receiving any kind of commission or fee. This is just a benefit for the members. There are no side deals, or part of the commission, or anything like that.”

The changes to the contract that the CAP negotiated in the wake of New York attorney general Eliot Spitzer’s investigation into the insurance industry, during which Aon was implicated but not indicted, remain in place, Dr. O’Neill says. Those include a prohibition against Aon accepting contingent commissions for steering business to certain carriers, which had been standard insurance industry practice for decades (Aon voluntarily discontinued the practice as of Oct. 1, 2004), as well as a provision giving the College recourse to switch to another broker if Aon were to lose its brokerage license in one or more states, he says.

“The membership should be reassured that, No. 1, we did look very critically at Aon last October and November when the Spitzer investigation was at its peak,” Dr. O’Neill says. “There were many conference calls among the College leadership about whether or not this [converting to the broker Aon] was the right thing to do. We decided it was and actually got a strong er contract by virtue of the Spitzer investigation.”

As a result of the investigation, Aon Affinity is now revealing its commissions to customers, Hood says. “We are much more upfront about what we make. We will send a letter that states what we make from the carrier,” she says. “It does not change what they would pay. It’s what we elected to do. Transparency is the key word there.”

Aon Affinity also will offer brokerage services for other lines of insurance, such as health, life, and accident and disability, Dr. Fody says, all on commission and at no profit to the CAP. “Certainly, we’re going to look at our other product lines and spiff them up,” he says. “But the liability is the thing that has generated the most concern among the members.”

Dr. O’Neill notes that only about 1,200 College members currently use the brokerage services out of 15,500 total—but he expects that number will climb.

“We could tap into that 90 percent” who don’t use the services, he says. “We’re trying to provide a benefit to 90 percent of our membership that says we don’t do it very well, or we don’t do it the way they want it done. We’re saying to Aon, ‘Market it more effectively, provide better products, give better customer service when people call in with questions.’ All of those things are what Aon says they’re willing to do.”

To start a free consultation in motion, CAP members should call 800-509-6118 or complete a request form at www.aonphysicianalliance.com.


Ed Finkel is a writer in Evanston, Ill. See CAP TODAY, December 2005, for coverage of the CAP’s overall insurance program for members.