Council on Insurance Report
By Dr. Larson R. Keso
Please join me in thanking George Shia for eight years service on the COI. His attendance, participation, and timely reports to our members reflect favorably upon SWSO.
The COI is charged with serving as liaison between the AAO and its insurance carriers. It also studies, evaluates, and makes recommendations on AAO-endorsed insurance plans and programs.
In keeping with that mandate, the Council met in St. Louis, on June 11, 2005. The family of AAO-endorsed insurance plans continues to grow. Since 2002, Employment Practices Liability (EPLI), Ten Year Term Life, and Long Term Care have been added to our portfolio of Professional Liability, Business Office Package (BOP) and Life and Health. The council has under review a Medicare Supplemental, a Twenty-Year Level Term Life policy, and increased maximum life benefit to $2 million. In addition, through JLT Services (Formerly Jardine), our sales and marketing arm, a data base of Long Term Care quotes is available. Through its brokerage desk, JLT provides a Medical Benefits Center (MBC) with rate quotes for members in states in which the AAO medical plan through New York Life is not available. Also, MBC can provide quotations for medical plans covering employees of members on a small group basis.
In the Winter 04/Spring 05 issue of the SWSO Newsletter, Dr. Shia reported in detail on the AAO HSA qualified Catastrophic Health Plan. This policy offers the high deductible options required for HSA compliance. By assuming part of the risk, members can realize significantly lower premiums. Details on all endorsed plans are available. Call the AAO Desk at JLT, 1-800-622-0344 or at www.aao-insurance.com.
Participation continues to increase. The Life and Health Plan currently insures 4,274 members in one or more plans underwritten by New York Life. This represents 52% of the total number of active, associate, and student members. The BOP plan currently insures 605 members, an increase of 59% in the past three years.
In policy-year 2004, incurred loss ratios were favorable in the Term Life, Disability, and Professional Overhead plans. Predictably, the Group Health Plan continues to post unfavorable losses. Thus, the Council is again compelled to approve a premium increase of 7% on the HSA Qualified Medical Plans and a 15% increase an all other Major Medical Plans.
Overall, the financial strength of the entire insurance program remains strong and our Cost Stabilization Reserve increased substantially in 2004.
The crown jewel of our endorsed products is AAOIC (An RRG). On May 31, our company celebrated its tenth birthday. A stock-based company, it is 100% owned by its shareholders, all AAO members who have purchased liability insurance. By September 1995, 930 policies had been issued. As of December 31, 2004, 3,748 policies were in force. This number represents 49% of all active and associate members residing in the United States. Persistency, a measure of renewals, continues at a remarkable 97.7%.
Emphasis on, and management of, risk is a hallmark of AAOIC. A very successful COI seminar was held at the recent San Francisco meeting. For the first time, a mock trial was featured. The Risk Management committee chaired by David Sabott, AAOSI staff, AAOIC board members, and trial attorneys, staged a simulated courtroom scene, based on an actual malpractice case. Over 260 members attended. Attendance at these seminars qualifies policy holders for a 10% annual premium discount.
A redesign of the AAO insurance web site was completed in January 2005. The site can be viewed at www.aao-insurance.com with a link to the AAO member’s site. Also, AAOIC has a new interactive site that can be accessed for premium quotes, applications, etc. The address is www.aaoic.com. Please view both sites and let me know if you have problems or suggestions as to how we can continue to improve the quality and quantity of this service.
The Council, in cooperation with AAOIC, has developed a business plan to produce a DVD featuring risk management education and availability of all other endorsed insurance products. The initial target audience is the new and younger members (ten or fewer years in practice) and orthodontic residents in training.
In compliance with a directive from the AAO Board of Trustees, a RFP for a Broker/Administrator for AAO Life/Health Insurance Programs has been developed and will be distributed this summer. JLT Services has been under contract providing sales and marketing with AAO since 1987. Prudent management dictates that we constantly survey all resources to assure members that our service providers are the best available.
Seventy-five percent of SWSO members have placed their trust and confidence in AAOIC and the percentage is growing each year. SWSO leads the country in participation. The range is from 32% (GLAO) to 60% (RMSO). After serving nine years on the AAOIC Board of Directors, I was replaced last year by Dr. Mel DeSoto. SWSO thus has continuing strong representation on the Board. As your representative, I strongly encourage any member who has problems with AAO insurance or with any AAO service providers to contact me at 405-943-8333 or lrkeso@earthlink.net.