This article is part of a series of case studies—real stories of how managed care companies increased profits by using Summit Re’s resources to increase sales, decrease expenses, and manage claims. “I confess through my own fault, in my thoughts and in my words, in what I have done, and what I have failed to do.” Although these words are part of the Confiteor, a Catholic prayer in which persons saying the prayer confess their sins, it could be the start of a discussion of errors and omissions (E&O) and directors and officers (D&O) coverages.
Errors and Omissions
E&O insurance policies cover things a company does, things a company does not do, or things that simply do not turn out as a customer or other third party expected.
E&O for a managed care plan covers you for the vicarious liability assumed for the business processes that are part of a health care delivery system, such as credentialing, UR, and claims. An IPA can be sued for malpractice, since patients, through the IPA’s advertising, may assume that their physicians are under the IPA’s control and the IPA is liable for their actions. Another emerging area is security and privacy liability, including health care history and personal information.
Directors and Officers
D&O coverage is designed to protect the officers and directors of a company for liability associated with business decisions and certain employment practices. Liability can arise from decisions regarding merger and acquisition disputes, failure to perform fiduciary duties (such as signing contracts that harm the value of the company’s stock), actions that violate anti-trust regulations, and business interference, to give a few examples. Liability can also arise from employment practices, such as discrimination, harassment, or wrongful termination.
D&O insurance policies provide protection for a company’s directors and officers whose personal financial assets can be put at risk in the event of a lawsuit regarding their decisions. It’s difficult enough to lose company financial resources because of inadequate or inappropriate insurance coverage; imagine how it would be if your own personal assets were at risk as well.
There are no standard E&O and D&O policies. Each insurer drafts its own policy forms and some fail to provide coverage in key areas for health plan exposures. A recent study showed that over 50% of directors and officers requested changes in their insurance coverage when they learned what was NOT covered under their current program.
Premiums are a function of the case size, liability and retention and can range from $10,000 to $100,000. Coverage, not price, is key because potential liabilities are so large.
Free coverage analysis
A free analysis of your current coverage is available to see if it’s possible to access better coverage at better rates. To give health plans access to better E&O and D&O policies, Summit Re has an arrangement with a national firm that specializes in property and casualty insurance products specifically designed for the health care industry.
We’ve offered this analysis of E&O and D&O coverage to several clients and they have appreciated the additional options presented as a result. We can do the same for you. To get started, please send us a copy of your current E&O and D&O policies. Typical insurer markets that provide these types of coverage include Lexington, Darwin Professional, Lloyd's of London and OneBeacon. Our program manager has access to all of these markets. We are happy to disclose all commissions and service fee arrangements.