Magazine article Clinical Psychiatry News

APA Members Get New Malpractice Insurer: Hold on Claims Payments to Expire July 1. (Old Policy in Force for Many)

Magazine article Clinical Psychiatry News

APA Members Get New Malpractice Insurer: Hold on Claims Payments to Expire July 1. (Old Policy in Force for Many)

Article excerpt

American Psychiatric Association members who carry APA-endorsed malpractice liability insurance received some good news after 2 months of uncertainty: A new, highly rated insurer is entering the picture to take over new policies and renewals.

Professional Risk Management Services Inc. (PRMS), the agent responsible for administering the plan for about 7,500 APA-member psychiatrists, announced to insureds on May 8 that two subsidiaries of American International Group Inc. (AIG) will write new policies and renewals that would previously have been written by the financially troubled Legion Insurance Co.

Meanwhile, at press time, the Pennsylvania Insurance Department (PID) was continuing its review of Legion to determine whether the company's finances could be salvaged and the company could continue operating.

"We have made no determination yet if [Legion] needs to be liquidated," said PID spokes-woman Roseanne Placey.

New policies and renewals under the PRMS umbrella will go to the National Union Fire Insurance Co. and the Lexington Insurance Co., both units of AIG, which carries an A.M. Best rating of A++ (superior). Current policies, however, are still embroiled in financial troubles brought on when PID stepped in on April 1 to keep Legion from going under.

The move triggered a 90-day hold on all claims payments, which expires on July 1. By that point, Ms. Placey said, PID expects to have completed its review and decided whether Legion will continue operating or be liquidated. If the latter occurs, APA-endorsed policies will be moved to AIG, said Dr. Alan I. Levenson, president and CEO of the Psychiatrists' Purchasing Group (PPG), which is listed as the sponsor of the APA-endorsed policies.

"With the new carriers having been identified, PRMS is able to turn attention to handling old policies and old claims," Dr. Levenson said.

If all goes smoothly with the transition, it would mark the end of several months of uncertainty, confusion, and frustration for APA members who use the liability insurance endorsed by the APA as part of their contract with PRMS.

"Everybody is frustrated," said Dr. Harold Eist, a former APA president and the chair of the APA's Insurance Oversight Committee. "The [committee] is frustrated; the members are frustrated. This kind of swirling situation is hard to pin down, it's hard to get information about it, and it changes from day to day"

The problems with Legion burst onto the scene in February, when A. …

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