Corey Little, president of Arkansas Mutual Insurance, foresees a day when malpractice insurance follows the patient.
A.M. Best Co.’s succinct announcement that Arkansas Mutual Insurance Co. had achieved an A rating was the culmination of two years of work by the Arkansas-only medical malpractice carrier to get ahead of a changing market.
“This now solidifies Arkansas Mutual for decades to come,” President Corey Little said last week. “It’s not pride: It’s what happens in every state with a home-state mutual.”
Arkansas Mutual was formed eight years ago to create in-state competition for the out-of-state carriers that swept in when St. Paul Cos. abandoned the med-mal market completely in 2001.
After starting from scratch, Arkansas Mutual now insures about 800 physicians in the state, Little said last week. 2015 revenue will be about $4 million, he said.
But during the company’s short life, the doctoring business has changed dramatically. Doctors in Arkansas as elsewhere have been leaving individual practice in droves and becoming employees of hospital-owned clinics.
“When we first went to see St. Bernards, they had four hospitalists on staff,” Little said of the Jonesboro health system. “Now they have 160 employed physicians.”
Similarly, CARTI — Central Arkansas Radiation Therapy Institute Inc. — did not directly employ physicians until it acquired two physician groups, Little Rock Hematology & Oncology in December 2011 and Hematology Oncology Services of Arkansas in January 2013.
Hospital bylaws typically require that they buy insurance only from carriers that win favorable soundness ratings from A.M. Best. That was a hurdle for Arkansas Mutual, which enjoyed an A rating from Demotech Inc. but was far too small for A.M. Best to consider.
Arkansas Mutual needed heft, and it wasn’t the only carrier facing a similar problem. After being courted by several potential partners — “I was sort of the prettiest girl at the party because we were growing,” Little said — the policyholders who own Arkansas Mutual settled on Constellation, a mutual holding company based in Minneapolis. On July 31, Arkansas Mutual officially became a subsidiary of Constellation, and the A.M. Best rating followed on Sept. 29.
With the A.M. Best rating in hand, Arkansas Mutual is preparing to introduce a product to compete with the market leader in hospital liability coverage, CNA Insurance. And Little says that having doctors and hospitals covered by the same carrier will ultimately benefit patients.
“Now the vision is we insure the physician out in the community, we insure the specialist, the hospital, the docs at the hospital, the rehab center and the nursing home,” he said.
Currently, he said, med-mal carriers spend a lot of time and money trying to find a way to blame some other company’s policyholder when a claim arises. Under Little’s ideal scenario, the same insurance company is protecting the patient as he moves from one Arkansas health care provider to another. Then, when there is an allegation of malpractice, “We aren’t going to spend a dollar or an ounce of energy worrying about who’s at fault.”
The A.M. Best rating also means that insurance agencies are willing to sell Arkansas Mutual’s policies, and Stephens Insurance of Little Rock immediately started representing Arkansas Mutual, which no longer sells policies directly.
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