A year after it was launched, a medical malpractice insurance company managed in Reno is ready to expand beyond its home turf in Nevada.
Premier Physicians Insurance Co., a doctor-owned risk retention group, provides malpractice coverage to about 100 physicians, mostly in the Las Vegas area.
The company generated about $5 million in premiums in its first year, and its books now carry $3 million in capital.
And it's profitable ahead of the schedule established by its founder, Las Vegas women's care specialist Dr. Warrant Volker.
As important as the financial results might be for the policyholders and investors who own the company, PPIC's first year was even more important as a demonstration that its business model works, says Robert Baratta, chairman and chief executive officer of Capstone Management Group.
Reno-based Capstone Management oversees the operation of PPIC, which is headquartered in Carson City.
Capstone currently employs about 30 slightly more than half of them at its south-Reno headquarters but Baratta says the number will begin to grow as PPIC steps into new states.
PPIC currently targets physicians in Arizona, California, Texas and Utah.
In those states, Baratta says, PPIC thinks it can carve out a position in the malpractice insurance business with the same strategy it developed in Nevada:
* Carefully choose physicians to cover, relying heavily on personal referrals from other doctors who know their colleagues.
* Actively manage risks, taking close looks at physicians' practices. Are weak medical records a potential liability? Does the attitude of the front-desk staff create bad relationships with patients? PPIC isn't content to leave a brochure about risk management with a practice manager, but instead wants to dig deep.
* Require that physicians and their patients agree to resolve disputes through binding arbitration rather than litigation. By avoiding trips to court, PPIC says claims will be settled faster and with dramatically less expense.
The company controls its costs, too, with reliance on direct marketing rather than using a network of brokers and agents to distribute its policies.
The company is so new that it doesn't have any claims experience, but Capstone Management notes that the number of medical malpractice claims in Clark County this year is on pace to be the highest since the malpractice crisis of 2003 sent carriers rushing out of Nevada.
At the same time, Nino Pedrini, the president and chief operating officer of Capstone Management, says some new carriers into the market are looking to buy market share through low-cost premiums.
Capstone and PPIC executives believe, however, that they can hold their own against price competition because policyholders in a risk retention group something like policyholders in a mutual insurance company have an ownership stake.
PPIC is confident enough in its strategies that it's looking for physicians to lead its forays into new markets, says Pedrini.
Those relationships with physicians are key to expansion plans, Baratta says, because of the knowledge doctors have about local practices and local practitioners.
"Medicine is a local business," he says.
