New Doctor-Owned Company Gets Go-Ahead from Ky. Department

Healthcare Underwriters Group of Kentucky (HUGKY), a medical professional liability insurance company owned by Kentucky doctors, has received authorization from the Kentucky Department of Insurance to begin operations.

The license to operate, also called a Certificate of Authority, was granted by Kentucky’s Acting Insurance Commissioner Glenn Jennings.

“We believe this new option will help address growing concerns about the affordability and accessibility of coverage in this difficult line of insurance,” said Jennings. “We are optimistic that this addition to the market will provide some needed relief to physicians.” HUGKY’s licensure reportedly comes at a time when many Kentucky doctors are struggling to find stable and affordable medical liability insurance.

“We’ve been working toward this day for over a year,” said Steven Salman, HUGKY’s CEO. “It’s very exciting to see doctors seize control of their future and work toward a permanent stabilization of Kentucky’s medical liability insurance market.”

“HUGKY was modeled after the nation’s most successful doctor-owned companies,” said Dr. Art McLaughlin, a Louisville radiologist who is Chairman of the Board for HUGKY. “We made sure the company’s sole product line was medical professional liability insurance, and that our risk pool includes only Kentucky doctors.”

McLaughlin is one of five initial physician board members. Other board members are Dr. Greg D’Angelo (Lexington), Dr. James Evans (Ft. Thomas), Dr. Robert Knight (Owensboro), and Dr. Linda Lear (Nicholasville). Additional physician board members are expected to be added during 2004.

The HUGKY Insurance model

HUGKY is an insurance reciprocal. A reciprocal is similar to a mutual because it is owned by its insureds – in this case, Kentucky doctors.

The new company will be non-profit and will not carry a premium load for profit. Additionally, HUGKY intends to operate as a non-assessable reciprocal, meaning that policyholders will not be “assessed” to pay for losses if HUGKY’s losses are greater than anticipated. HUGKY has secured reinsurance for extraordinary losses.

If, on the other hand, losses are less than anticipated, HUGKY’s policyholder-owners may receive either a dividend payment or a reduction in future premiums. Dividend payments and premium reductions are both subject to approval by the Kentucky Department of Insurance.

A hallmark of HUGKY will reportedly be an aggressive approach to defending claims. The company management team is intent on employing an aggressive defense strategy and intolerance of nuisance claims.

Through their ownership in HUGKY, Kentucky doctors will have a voice on issues of medical liability. For example, a Subscribers Advisory Committee (physician board of directors) will review actuarial data and make recommendations for establishing annual premiums. Kentucky doctors will also be involved in the development of underwriting and claims-handling policies.

Healthcare Underwriters Group of Kentucky is regulated by the Kentucky Department of Insurance.