Captives Hopeful

HUD Will Alter

Nursing Home Rule

An insurance regulator is optimistic that industry objectionswill convince federal officials to alter a proposed rule thatcaptive groups believe could keep their nursing home members fromsecuring federal construction loans.

The U.S. Department of Housing and Urban Development hasproposed a stricter financial strength requirement for insurers ofnursing homes, many of which are captives. The rules would affectwho qualifies for government-insured mortgages.

William P. White, captive director for the Washington, D.C.Department of Insurance, Securities and Banking, voiced his opinionin the wake of a meeting with John C. Weicher, federal housingcommissioner at HUD, who “was not aware that the kinds of concernswe raised on the alternative market side were even there,” Mr.White said. “He was trying to resolve an issue he felt was worthlooking into, but he had only talked to the traditional [insurance]side.”

Mr. White earlier told National Underwriter that byrequiring insurance to come from “A”-rated insurers and allowing adeductible of no greater than $25,000 per occurrence, “you have nowhamstrung the very organizations that are trying to get insurancein a very difficult market.”

He said many long-term medical care providers have found a wayto deal with “a terrible situation in the current hard marketthrough a risk retention group or other alternative marketmechanism,” and now “their captive is being required to be ratedand have an A-rating.”

Mr. White said Mr. Weicher agreed to review “very carefully theinput that came in during the response period and any informationwe might provide subsequent to that.” Mr. Weicher, he added, saidthat “under the circumstances there probably will need to be somemodifications made based on the information that was provided.”

Among those at the meeting were Chris Kramer, senior vicepresident with Neace Lukens in Beachwood, Ohio, who brought therule to the attention of captive insuers at last month's CaptiveInsurance Companies Association meeting, along with Robert H.“Skip” Myers Jr., general counsel for the National Risk RetentionAssociation, and Lawrence Mirel, Washington, D.C. insurancecommissioner.

Reproduced from National Underwriter Edition, April 16, 2004.Copyright 2004 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.