© 2005 Zurich Another Year of Sleepless Nights: Hospital Professional Liability Insurance PLUS Medical Professional Liability Symposium March 17, 2005

© 2005 Zurich Goals and Objectives Sleepless Nights Nightmares Sweet Dreams

© 2005 Zurich Goals and Objectives Emerging Issues Severity Threats & Exposure Evaluation Risk Management and Underwriting Discipline

© 2005 Zurich Sleepless in Simsbury Adequacy of Pricing/Softening Market Complexity/acuity of services performed on an outpatient basis Exposures in critical access hospitals Regulatory Compliance

© 2005 Zurich Sleepless in Avon Softening excess pricing Financial condition of Physician Carriers Physicians Limits Severity and Volatility Broadening Coverage Lack of Meaningful Tort Reform in most states

© 2005 Zurich Sleepless in Stamford Reinsurance Pricing Aggregate Drop Down Rate and Trend Tail Exposure Other Coverage provided within umbrella programs Side Effects of Tort Reform Risk Management

© 2005 Zurich Sleepless in Chicago Risk Management Role – Hospital Setting Risk managers must be leaders Risk manager’s role continues to expand into a senior- level function Risk management function extends beyond the four walls

© 2005 Zurich Sleepless in Chicago Risk Management Role – Hospital Setting Enterprise risk management continues to gain momentum Operational risk Financial risk Human capital Strategic Legal and regulatory Technology Customer and community relations

© 2005 Zurich Sleepless in Chicago Evolving Risks within the Hospital Setting Technology risks – equipment complexities and practitioner competencies Allied healthcare providers – practice scope and supervision Global Telemedicine and Telemonitoring

© 2005 Zurich Sleepless in Chicago Evolving Risks within the Hospital Setting Patient population – greater life expectancy and complex care needs Patient and family expectations Provider communication Risks associated with the aging – wounds, falls, medication errors Intangible risk impacting financial domain Community perception Media control and outcomes

© 2005 Zurich Sleepless in Chicago Risk Management and the Insurance World A uniform model to measure risks has not been developed and adopted Risk causes a differentiation into “ex-post” and “ex-ante” returns Informed decision making is enhanced when loss exposures and scope of risk are defined and categorized Price should not control the process Risk management consultants must embrace the enterprise risk management model and understand each domain

© 2005 Zurich Another Year of Sleepless Nights: Hospital Professional Liability Insurance Questions & Answers

© 2005 Zurich Insanity is doing the same thing over and over expecting a different result! THIS IS A MEDICAL LIABILITY SYMPOSIUM, NOT A SYMPOSIUM ON PSYCHIATRIC CARE! Sleepless Underwriters advise…