The 2002 annual PELA conference was a winner on all fronts. The speakers were dynamic and informative, the participants were, as always, attentive and involved, the hotel was breathtaking and the weather couldn’t have been better. If you were not lucky enough to be with us in San Diego for this great event, following are some of the highlights.

The official start of the conference was the Welcome Reception Sunday evening sponsored once more by NiiS/APEX. Cocktails, people reacquainting and the sound of the waves were enjoyed at the beachfront Cottage on the property of the beautiful Hotel Del Coronado.

The presentations began Monday morning with Steve Murphy, PELA President, introducing the first speaker — Winfield Swarr. Once again the PELA conference inspired lively discussion. There was a great mixture of “old favorites” and fresh perspectives.

Managed Care Insurance/Reinsurance From 10,000 Feet
Winfield Swarr, Senior Vice President and Chief Underwriting Officer at Standard Security Life Insurance Company of New York held our attention with a “State of the Industry” address. He spoke to many of the problems facing the HMO/PEL market,such as poorly understood risk matrices and changes in risk profiles. In fact, Standard Security recently saw an outpatient bill that reached $4.5M!

Mr. Swarr advised us all: “Clients always know more than we do” and recommended: “If you don’t understand it, don’t do it.”

Claims Challenges – The Excitement Continues
Though she didn’t stand on the table this year (only because there wasn’t one available), Adria Garneau, CEBS, NiiS/APEX, captivated the group with an energetic presentation on claims issues. She encouraged us to look at our contracts from a claims point of view – Are the provider matrices specific enough? Are our definitions clear? And yet again the question warrants repeating: What do you mean by “in lieu of” language?

Her parting advice: “Define what you mean, write it down, and live by it.”

HIPAA – Privacy Issues and Why We Need to Accept Them
William Megna, a leading authority on insurance law and the founder of Megna law firm, detailed the enormous challenges our industry and our clients face with implementing HIPAA privacy legislation. He warned us of the implications, both civil and criminal, of non-compliance.

Models to Improve Pricing for Provider Excess Coverage
Challenging us to “get more into the detail and dig into what drives each claim”, Tim Robinson, Consulting Actuary, NiiS/APEX, encouraged us to fine tune our pricing models. He advised us to understand the frequency of catastrophic claims and the network terms under which those claims will be evaluated. To be effective a pricing model needs to have “more meat than just factors.”

Broker Roundtable
We wrapped up our first day with a spirited discussion led by key brokers in the industry. Scott Buchanan, American RE Health Care, moderated the panel. Representing the broker community were Mark Angaard, Towers Perrin Re; Dan Carlson, Marsh Global Broking; and Chuck Newton, Evergreen Re.

The topics debated included:

• The migration of large HMOs and health systems from reinsurance to self-insurance.
• Whether buyers would pay more money for higher per diems or unlimited coverage.
• Niche products, such as transplant coverages, becoming very popular.

Day 2 of the conference was equally as worthwhile and stimulating. The day started with Ginny McHugh.

Filing Provider Excess & Trends in Regulators Thinking
Back again from last year, Ginny McHugh, President - McHugh Consulting Resources, updated us on the regulatory issues we face in getting our products approved and keeping them compliant. She discussed the schizophrenia between the states regarding Provider Excess. Is it A&H or P&C? Detailed information on hot buttons and common objections on a state-by-state basis was provided for our compliance staff’s review.

Capitation’s Future – Trends from the Past and Present
Charles Crispin, Evergreen Re, and Jon Brunsberg, Reden and Anders, shared with us their perspective on a question that continuously perplexes the industry: Where is capitation going?

Some of their insights:

• The number of providers taking capitation has declined, but those that are left understand capitation and how to manage the risk.
• Providers taking Medicare risk are exiting faster than those taking commercial risk. Mr. Crispin pointed out that this is not a surprise because “If payers can’t profit, how can providers?”
• HMOs are facing more restrictive legislation, resulting in “UM-lite” and more costs for providers.

Their presentation left us with a most definitive answer to the Provider Excess/HMO RE industry - “It all depends.”

Health Maintenance Organization Solvency Issues and Coverage
Our afternoon started with a topic many of us in the industry struggle with – underwriting insolvency coverage.

David Staples, Independence Care, and Doug Dalrymple, Chubb Specialty Services, walked us through how we reached where we are today, and how we should change things in the future. Much of the discussion ensued around the pricing of the product. The presenters recommended that the product be priced like a letter of credit and be based on a percentage of the limit provided.

The bottom line is that weak HMOs should not be offered coverage. According to Mr. Staples and Mr. Dalrymple, “The basic rule for financial underwriting is that you do not want to be the reinsurer that is tagged with an insolvency”.

They closed their presentation with: ‘Only the strong survive – under-capitalized HMOs will either not be able to procure the coverage or, if they do, they will pay a much higher rate’.

PEL/HMO RE Industry Issues – Open Forum
The conference closed with our annual open forum. Each year the PELA participants are given the opportunity to share their views on the topics presented by previous speakers as well as any other issues that may arise. As in past years, Cathy Sussman of Allianz Life led this discussion.

Despite the San Diego sunshine and the desire to play at the Hotel Del Coronado, the conversation was lively and animated—we are not a shy group!

The PELA Board would like to extend a “thank you” to all the speakers and sponsors who made this conference a success.

We know this was a particularly difficult year and we are very grateful to the following sponsors for their contributions:

Allianz Life, Chubb Specialty Services, Evergreen Re, Intermediary Insurance Services, IOA Re, NiiS/APEX Group Holdings, Partners In Care.

And of course, this conference simply would not happen without Dorothy Gasparro, HR Options, LLC, who manages all the details—Thank you, Dorothy!