ProAssurance Profile
ProAssurance Corporation (ProAssurance) operates as a holding company for property and casualty insurance companies.
ProAssurance is a U.S. based specialty property and casualty and workers' compensation insurance carrier. The company’s specialty property and casualty insurance products primarily include professional liability insurance and liability insurance for medical technology and life sciences risks.
Strategy
The basic components of the company’s strategy are to pursue profitable underwriting opportunities; provide specialized healthcare-centric expertise and thought leadership to meet the evolving demands in the healthcare and medical technology markets; provide superior workers' compensation products and services; provide superior customer service; focus on innovation; manage claims effectively; and emphasize risk management. The company’s investment portfolio primarily consists of investment-grade, fixed-maturity securities of short-to medium-term duration.
Segments
The company operates through Specialty P&C, Workers' Compensation Insurance, Segregated Portfolio Cell Reinsurance, and Corporate segments.
Specialty Property and Casualty segment
The company’s Specialty P&C segment focuses on professional liability insurance and medical technology liability insurance. Professional liability insurance is primarily offered to healthcare providers and institutions and, to a lesser extent, to attorneys and their firms. Medical technology liability insurance is offered to medical technology and life sciences companies that manufacture or distribute products, including entities conducting human clinical trials. As previously discussed, the company reorganized its segment reporting in the third quarter of 2023. As a result, the underwriting results from the company’s participation in Syndicate 1729 and Syndicate 6131 at Lloyd's London which were previously reported in a separate segment are now reported in the company’s Specialty P&C segment. The company normally reports results from its involvement in Lloyd's Syndicates on a quarter lag, except when information is available that is material to the current period.
Professional Liability Insurance
The company’s professional liability business is primarily focused on providing professional liability insurance to healthcare providers. The company targets the full spectrum of the medical professional liability market, covering multiple categories of healthcare professionals, institutions (which includes hospitals, surgery centers and miscellaneous medical facilities) and, to a lesser extent, facilities specializing in long term residential care. While a majority of the company’s business is written in the standard market, the company also offers professional liability insurance on an excess and surplus lines basis through the company’s Specialty business; and the company offers alternative risk and self-insurance products on a customized basis.
The company’s custom alternative risk solutions include loss portfolio transfer programs for healthcare entities who, most commonly, are exiting a line of business, and assumed reinsurance for healthcare entities who, most commonly, are changing an insurance approach or simply looking for a more tailored solution for transferring risk. The company’s assumed reinsurance is primarily consisted of premiums assumed on a quota share basis from the company’s strategic partnership with an international medical professional liability insurer. The company’s custom alternative risk solutions also include a turnkey captive solution whereby the company cedes all or a portion of the healthcare premium, net of reinsurance, to three SPCs of the company’s wholly owned Cayman Islands reinsurance subsidiary, Inova Re, which is reported in the company’s Segregated Portfolio Cell Reinsurance segment. Each SPC is owned, fully or in part, by an individual company, agency, group or association, and the company has a 25% participation interest in the results of one of the SPCs.
The company utilizes independent agencies and brokers, as well as an internal business development team to write the company’s HCPL business. The agencies and brokers the company uses typically sell through healthcare insurance specialists who are able to convey the factors that differentiate the company’s professional liability insurance products.
The company markets its insurance products through its business development team and through the company’s agents, as well as direct mailings and advertising in industry-related publications. The company is also involved in professional societies and related organizations and support legislation that will have a positive effect on healthcare and legal liability issues. The company maintains a regional business model, which permits the company to consistently provide a high level of services to customers on a local basis.
The company maintains regional claim management offices where its internal claims personnel investigate and monitor the adjudication of the company’s professional liability claims. The company engages experienced, independent litigation attorneys in each venue to assist with the claims process as this practice aids the company in providing a defense that is aggressive, effective and cost-efficient. The company evaluates the merit of each claim and determine the appropriate strategy for resolution of the claim, either seeking a reasonable good faith settlement appropriate for the circumstances of the claim or aggressively defending the claim. As part of the evaluation and preparation process for HCPL claims, the company meets regularly with medical advisory committees in the company’s key markets to examine claims, attempt to evaluate practice patterns and make recommendations to the company’s underwriting and risk management team members for implementation with customers.
The company also provides professional liability coverage to attorneys and their firms in select areas of practice, which is a part of the company’s Small Business Unit. The company’s legal professional liability coverage accounts for approximately 2% of the company’s 2023 gross premiums written. This business offers errors and omissions liability insurance policies for law firms engaged in the private practice of law. The program generally insures solo practitioners and smaller firms; almost all of the company’s insured attorneys are members of a firm employing five or fewer attorneys. The areas of practice of the company’s insured firms include plaintiff, real estate, criminal defense and general corporate law. The program does not insure firms practicing in areas that are considered high hazard, such as securities and intellectual property law.
The company’s legal professional liability line of business operates in 34 states written through independent brokers. Brokers are appointed and must specialize in legal professional liability. The territory of appointed brokers is restricted to a state or a small number of states in order to maintain a level of exclusivity.
Medical Technology and Life Sciences Insurance
The company’s Medical Technology Liability business offers products-completed operations and errors and omissions liability coverage for medical technology and life sciences companies. The vast majority of these insureds and the products they manufacture and/or distribute are regulated by the U.S. Food and Drug Administration or similar regulatory authorities in foreign jurisdictions. The products the company insures cover a broad array of medical devices and pharmaceuticals, including but not limited to, infusion systems, operating room surgical instruments and disposables, laboratory equipment and supplies, in vitro diagnostic test kits and instruments, patient mobility aids, respiratory and anesthesia products, cardiovascular devices, vaccines or cancer therapeutics, laser surgical instruments, non-invasive diagnostic imaging systems, orthopedic implants and human and veterinary branded and generic drugs. The company provides coverage for commercialized products and all phases of clinical trials. The company’s products-completed operations and errors and omissions liability coverage offerings are provided on both a primary or excess basis.
Almost all of the company’s Medical Technology Liability business is written through independent brokers. The company works with licensed property and casualty insurance brokerages across the country and do not require an appointment except where required by law. The company defends its Medical Technology Liability claims vigorously, with a negotiated settlement being the most frequent means of resolution.
Lloyd's Syndicates
The company’s Lloyd's Syndicates business includes the results from its participation in Syndicate 1729 and Syndicate 6131 at Lloyd's of London.
The company has also provided capital to Syndicate 1729 at Lloyd's of London to support the company’s previous participation in underwriting years that remain open. Effective September 2023, the company elected to discontinue its participation in the results of Syndicate 1729 beginning with the 2024 underwriting year. The results from the company’s participation in Syndicate 1729 from open underwriting years prior to 2024 will continue to earn out pro rata over the entire policy period of the underlying business. Due to the quarter lag, the company’s ceased participation in Syndicate 1729 will begin to be reflected in the company’s results in the second quarter of 2024.
Workers' Compensation Insurance segment
The company’s Workers' Compensation Insurance segment offers workers' compensation products primarily in 19 core states in the East, South and Midwest regions of the continental U.S. The company’s Workers' Compensation Insurance segment consists of two major business activities:
Traditional workers' compensation insurance coverages provided to employers, generally those with 1,000 employees or less. Types of policies offered include guaranteed cost policies, policyholder dividend policies, retrospectively-rated policies and deductible policies.
Alternative market workers' compensation solutions provided to individual companies, agencies, groups or associations. The workers' compensation premium written is 100% ceded to either the SPCs at Inova Re, which are reported in the company’s Segregated Portfolio Cell Reinsurance segment, or captive insurers unaffiliated with ProAssurance for two programs. Alternative market solutions include program design, fronting, claims administration, risk management, SPC rental, asset management and SPC management services. Of the company’s total alternative market premiums written, approximately 93% in 2023 and 2022 was ceded to the SPCs at Inova Re.
All of the company’s workers' compensation products are distributed through a group of appointed independent agents.
The company utilizes an individual account underwriting strategy for the company’s workers' compensation business that is focused on selecting quality accounts. The company’s intention is to underwrite a diverse book of business with respect to risk classification, hazard level and geographic location. The company target accounts with strong return to wellness and safety programs in primarily low to middle hazard levels, such as clerical offices, light manufacturing, healthcare, auto dealers and service industries and maintain a strong risk management unit in order to better serve the company’s customers' needs.
The company emphasizes early intervention and aggressive disability management, utilizing in-house and third-party specialists for case management, including medical care. Strategic vendor relationships include preferred provider, physical therapy, prescription drug and catastrophic medical services.
Segregated Portfolio Cell Reinsurance segment
The company’s Segregated Portfolio Cell Reinsurance segment includes the results (underwriting profit or loss, plus investment results, net of U.S. federal income taxes) of SPCs at Inova Re and Eastern Re, the company’s Cayman Islands SPC operations. Each SPC is owned, fully or in part, by an individual company, agency, group or association and the results of the SPCs are attributable to the participants of that cell.
The company participates to a varying degree in the results of certain SPCs and, for the SPCs in which the company participates, its participation interest ranges from a low of 15% to a high of 85% as of December 31, 2023. Each SPC is operated solely for the benefit of its cell participants, and the pool of assets of one SPC are statutorily protected from the creditors of any other SPC. The results of the SPCs are allocated among the cell participants in accordance with the terms of the cell agreements. In addition, the Segregated Portfolio Cell Reinsurance segment includes the investment results of the SPCs as the investments are solely for the benefit of the cell participants. The segment results also reflect the company’s share of the results of the SPCs in which the company participates. The SPCs assume workers' compensation insurance, healthcare professional liability insurance or a combination of the two from the company’s Workers' Compensation Insurance and Specialty P&C segments.
The underwriting, marketing and distribution of policies written in alternative market programs are the same as that of the segment from which the policy was assumed: Workers' Compensation Insurance or Specialty P&C segments.
Corporate Segment
The company’s Corporate segment includes its investment operations excluding those reported in the company’s Segregated Portfolio Cell Reinsurance segment.
Insurance Regulatory Matters
The company is subject to regulation under the insurance and insurance holding company statutes of various jurisdictions, including the domiciliary states of the company’s insurance subsidiaries and other states in which the company’s insurance subsidiaries do business. The company’s insurance subsidiaries are primarily domiciled in the U.S. The company’s states of domicile include Alabama, California, Florida, Illinois, Missouri, Pennsylvania, Texas and Vermont. The company’s foreign jurisdictions include the company’s reinsurance operations based in the Cayman Islands and, through the company’s participation in Lloyd's Syndicates, the company’s insurance and reinsurance operations based in the U.K. that the company supports.
The United States
The company’s insurance subsidiaries are required to file detailed annual statements in their states of domicile with the NAIC and, in some cases, with the state insurance regulators in each of the states in which they do business.
Each of the domiciliary states of the company’s insurance subsidiaries and affiliates, excluding Missouri, has enacted data security or data privacy laws. Within the past few years, the following domiciliary states of the company’s insurance subsidiaries and affiliates have enacted or amended data security or data privacy laws:
Alabama enacted the Insurance Data Security Law, effective May 1, 2019.
California enacted the California Consumer Privacy Act of 2018, effective January 1, 2020, and the California Privacy Rights Act of 2020, effective January 1, 2023. The CPRA amends and expands the CCPA.
The District of Columbia enacted the Security Breach Protection Amendment Act of 2020, effective June 17, 2020.
Florida enacted the Florida Digital Bill of Rights, which will be effective July 1, 2024.
Illinois amended its Personal Information Protection Act, effective January 1, 2020, and enacted the Insurance Data Security Law, effective January 1, 2024.
Pennsylvania enacted the Insurance Data Security Law, effective December 11, 2023.
Texas enacted the Texas Data Privacy and Security Act, which will be effective July 1, 2024.
Vermont amended its Security Breach Notice Act, effective July 1, 2020, and enacted the Vermont Insurance Data Security Law, effective January 1, 2023.
International
The Cayman Islands
The company’s SPC business operates through the company’s subsidiaries, Inova Re and Eastern Re, which are organized and licensed as Cayman Islands unrestricted Class B insurance companies. Inova Re and Eastern Re are subject to regulation by the CIMA.
History
ProAssurance Corporation was founded in 1976. The company was incorporated in Delaware in 2000.
