Some health care systems have positioned themselves as innovators in new ways to improve your care and mine.
These acute care teaching facilities have created new ways to improve our care and have also created new exposures in the so-called “Life Sciences” area that the commercial insurance and reinsurance market has, thus far, seemed largely unable to understand and accommodate.
Across the United States innovation hubs are being sponsored by tax-exempt hospital systems as ways to stake out an activist position in improvements in the quality of care through investments in new technologies. I’m talking about venture capital exercises: taking the kernel of an idea, putting it through a strenuous vetting process, injecting seed capital, and allowing the idea to bloom into something you can build, invent, manufacture, and launch…whether by way of tangible devices or intangible systems…all designed to save lives while reducing the terrific burden of the expense of U.S. health care delivery.
There are approximately 47 of these incubators of excellence located throughout the United States, and these centers of improvement and innovation have, in the past three or four years, done some remarkable things that are worth noting. They have also thrown off new exposures to risk, and, fortunately, because all of these innovators also own their own captives, they have been able to find ways to create the insurance capacity needed to indemnify and defend these innovation hubs within their own captive insurance companies…supplemented by heavily-manuscripted excess insurance and reinsurance cover supplied by a handful of forward-thinking members of the commercial marketplace.
This is more than just breezing through the products and completed operations section of a standard ISO form GL policy. This is about the complexity of marrying the risks associated with clinical trials with the actual risks associated with investments in the product that gets tested through the Stage I to Stage IV clinical trials process.
Those of us who have been in the captive business a long time know that the old arguments supporting captives folding their tents when the market is soft don’t hold water anymore. Captives have always been about the way in which claims are managed, adjusted, compromised, and settled; and they have also always been about the ability to manuscript cover, with the support of creative commercial capacity, when cover on a primary basis is not available or inconsistently available, or where the insurance market simply doesn’t understand where the risks and, thus, the exposures lie and are just waiting to see how the market develops “around the problem.”
Innovation…innovating…it’s about tax-exempt acute care facilities competing in the marketplace of ideas, in tandem with gearing up to compete in the marketplace of populations.
We are honored to have several innovation hubs within our client base. A superb example of technical and clinical innovation at its best is what Dr. John Pigott and Justin Hammerling at ProMedica Innovations have been doing over the past four years.
You can learn more about one of the best innovation hubs in the United States at:
Perhaps the best news of all about what John and Justin are doing is that they are helping to revitalize the economy in northwest Ohio with the creativity of their ideas.
Captives to the rescue again. This time with Life Sciences exposures. Helping insureds quantify where the risks lie. Explaining those risks to the commercial marketplace. Creating partnerships with that marketplace, where predictable risk is absorbed and unpredictable risk is transferred.
The story of captives goes on in the midst of the most prolonged soft market cycle in my forty years in the business. It does this because the story of captives is, in fact, the story that defines the term “innovation.” That some members of the commercial insurance market still do not understand this…just means more capacity stripped from the commercial marketplace.
My best advice to the insurance and reinsurance market, with regard to captives, is “find ways to partner, find ways to innovate, find ways to serve.”