(Woodbridge,
NJ) December 6th, 2002 – Conventus Inter-Insurance Exchange, a physician owned and governed medical malpractice
insurance company, today announced that it has received a Certificate of
Authority from the New Jersey Department of Banking and Insurance to begin
underwriting medical malpractice insurance in New Jersey. The company will
immediately commence operations and has opened a new membership offering.
It is accepting new applications from New Jersey physicians now through
January 31st, 2003.
"Today is an important milestone for New Jersey’s medical
malpractice insurance market," said Richard Augustyn, Chief Executive
Officer of NIP Management Company, LLC. NIP Management Company, LLC, a
subsidiary of National Insurance Programs of Woodbridge, NJ, will
administer the Conventus program under the auspices of its
physician-comprised Board of Governors. "Over the past several months, we
have had the privilege to work with hundreds of doctors who decided it was
time to stand up and take back control of an insurance market in disarray.
We are delighted that today, the state has recognized their efforts and
given their approval to a unique company that is owned by doctors,
operated by doctors and exists only for the benefit of doctors."
In a recent nationwide analysis by the American Medical
Association, New Jersey was one of twelve states where the cost of
securing medical malpractice insurance has been identified as reaching
crisis proportions. The analysis estimated that some New Jersey surgeons
and obstetricians may pay as much as $200,000 or more for annual
professional liability coverage. A survey conducted by the Medical Society
of New Jersey found that medical malpractice insurance premiums increased
in 2002 by an average of 40 percent.
Exacerbating the situation, the pool of companies that
offer medical malpractice in New Jersey has contracted drastically over
the past year. As a result of this worsening crisis, 6 out of 10 New
Jersey physicians will be forced to find a new medical malpractice
insurance company amid a shrinking market and sharp increases in pricing.
New Jersey Banking and Insurance Commissioner Holly Bakke
called the approval of Conventus "an important step in the state’s effort
to bring more competition to the medical malpractice insurance market.
"The Department’s approval of Conventus improves the
availability of medical malpractice insurance coverage in New Jersey."
Commissioner Bakke added. "This is good news to physicians who are
confronting difficult decisions regarding their New Jersey practices
because of the medical malpractice insurance market."
"On behalf of our physician members, we would like to
thank Commissioner Bakke and her staff for their cooperation in
facilitating the expedited review that led to today’s developments," Mr.
Augustyn added. "Thanks to their efforts, we can begin our important
mission of bringing rationality and confidence to New Jersey’s medical
malpractice insurance market.
The Conventus Solution
Conventus Inter-Insurance Exchange was established in
direct response to New Jersey’s worsening medical malpractice insurance
crisis. Conventus members comprise a reciprocal insurance exchange, an
unincorporated group of individuals who mutually insure one another.
Conventus’ mission is to provide New Jersey doctors with a long term
medical malpractice insurance solution at cost, with no profit motive.
"There used to be a time when medical malpractice
insurance was something you purchased as a necessary part of conducting a
medical practice, but then you forgot about it and hoped you’d never use
it," said Conventus founding member Steve P. Shikiar, MD, FACS. "Today it
is a ‘business cost’ that can cost you your business. It’s about time we
had control of our insurance destiny."
Conventus members will elect a Board of Governors to make
all important company decisions. Only physician policyholders of Conventus
may serve on the Board of Governors, ensuring that the Board will be
independent and will serve only the interests of its members. Members will
have control over every aspect of the company. NIP Management Company, LLC
will oversee the day-to-day operations of the company.
"We will manage the exchange as if we all owned 100
percent of it, as if it is the only asset in the world that we will ever
have, and as if we can't sell or merge it for at least two centuries,"
said Mr. Augustyn. "Very few other insurance managers operate under a
similar mandate, mainly because they have owners who focus on short- term
prospects and reported earnings. One of our principal advantages is our
unique group of owners. Many of them will be with us for decades to come.
This stable ownership base gives us the longest-term management horizon to
be found in an insurance company. We certainly won't ignore the current
results of the Exchange, as they are of great importance to us. But we
will never allow them to be achieved at the expense of building
ever-greater financial and competitive strengths."
"Over the last several months, the press has been filled
with reports of physicians and specialists saying that they’re considering
leaving the state because of the cost of medical malpractice insurance,"
said Conventus founding member Albert A. Talone, D.O., President of the
New Jersey Association of Osteopathic Physicians and Surgeons. "The market
is crying out for help. Finally, there’s a choice that holds out hope for
adequate coverage with affordable premiums. In addition, by setting up a
company that has no profit objective, will only issue medical malpractice
insurance, and will restrict membership to New Jersey doctors, we don’t
have to worry about ballooning premiums to satisfy the need for
shareholder profits."
The Conventus Business Model
Conventus Inter-Insurance Exchange will solicit and accept
applications from independent practice physicians and physician groups in
all medical specialties throughout New Jersey without regard to size. The
company will not expand into other lines of insurance or offer coverage to
hospitals and other health care facilities, nor will it underwrite
policies in other states.
"The strategy we have adopted precludes our following
standard diversification practices. Our research supports the view that a
policy of product and market concentration may well decrease risk if it
raises, as it should, both the intensity with which we think about the
business and the comfort level we must feel with the economic prospects
before becoming fully invested in it," Mr. Augustyn noted.
The Conventus business model is built to achieve steady,
conservative growth, and will accomplish its mission through disciplined
and highly selective underwriting of risk. This strategy is designed to
produce results that will out-perform industry averages while creating
stable, long-term premium pricing and availability of malpractice coverage
for its members. Conventus will take all necessary steps to guarantee
consistent and fair underwriting treatment.
The company will offer claims-made medical malpractice
insurance policies at cost, with excess profits being returned to
policyholders in the form of dividends or distributions. It will offer
liability limits of up to $5 million per occurrence, $7 million aggregate.
According to a study by Jury Verdict Research, an independent research
company, 28 percent of settlements in recent malpractice suits have
exceeded $1 million.
The company also recently announced that it eliminated a
$500 fee it previously charged physicians to apply for membership. The
application fee was implemented during the company’s initial offering
because it was necessary to verify applicants’ true level of interest.
With the company’s formation goals met, it is no longer necessary. The
elimination of the fee makes it easier for physicians who need to know
their options to obtain a quote from Conventus.
Membership in the Conventus Inter-Insurance Exchange is
open to individual primary care physicians and specialists who conduct
more than 75 percent of their practice in the State of New Jersey. For
more information on the current membership offering from Conventus, New
Jersey physicians and specialists may call (800) 446–7647 and ask to
speak to a representative about Conventus.
About Conventus Inter-Insurance Exchange
Conventus Inter-Insurance Exchange is a not-for-profit,
non-assessable reciprocal insurance exchange providing medical malpractice
insurance in New Jersey. Conventus is a mutual-type insurance company,
owned and governed by its physician policyholders, and is administered by
attorney in fact NIP Management Company, LLC, a subsidiary of National
Insurance Programs (NIP). NIP is an Underwriting Manager specializing in
proprietary insurance programs for specialized markets. Conventus provides
quality medical malpractice insurance coverage that is affordable over the
long term to individual physicians and surgeons who conduct more than 75
percent of their practice in the state of New Jersey.
