If there's a common thread among underwriters and insurancebrokers serving the growing allied health industry, it is fiercecompetition triggered by a soft property and casualty market andexcess capacity, experts contend.

The market is also being squeezed by admitted carriers enteringan area previously dominated by nonadmitted carriers.

“We're definitely in a softer, more competitive market than twoor three years ago, and we're seeing a tremendous uptick in healthcare facilities opening new businesses,” observed PhilipTwietmeyer, senior vice president, middle markets, with ACE MedicalRisk in Philadelphia.

“It's very competitive,” he said. “It's almost like where wewere 10 years ago. But we're an underwriting organization,” headded. “We strive for underwriting profit [and] we stay very closeto our customer base, which is the health care specialist retailand/or wholesale broker.”

He noted that a number of home health care agencies are beingstarted, because nursing homes “tend to be more expensive and arecrowded. So in-home care is definitely a trend that is growing,with the baby boomers starting to retire,” he said.

C.J. Wright, a senior broker with All Risks, Ltd., wholesalebrokerage in Hunt Valley, Md., said he is seeing “smaller and morestartup” health care operations seeking coverage, in contrast tobigger ones that were more prevalent a couple of years ago.

He speculated that the reason for the change might be related tothe fact that “incumbent carriers are willing to do what they needto do basically to retain [larger businesses], especially ifthey've had a good loss history,” while smaller allied health risksare shopping for coverage.

Mr. Wright said allied medical business, for the most part, isstill nonadmitted business, “which is also good for an E&Swholesale broker.” One thing he said he doesn't worry too muchabout is “the admitted market coming in and taking thebusiness.”

Where this might happen, however, is not so much in the alliedmedical arena as in social services, he said, pointing to oneregional specialist in both segments. “They write on admitted paperand are pretty aggressive [even] on home health care, which isallied medical” business, he said.

But even when competition can be fierce, wholesale brokers willfind ways to add value to clients, according to Matt Nichols,president of All Risks.

“If insurers can't be beat on price, our job is to figure outhow we're going to add value from a coverage standpoint, from aservice standpoint, from a pricing standpoint and tie all thattogether.”

Erik Halvorsen, also a senior broker with All Risks, noted, “Youcan't take the easiest path, which is price. It's not thatsimple.”

“I like this class because there's a lot of power in thedetails. If you're willing to understand, and then probe and askquestions about the coverages, you can set yourself apart,” hesaid.

In the current economy, he believes there will be moreopportunity in the non-nursing home area of health professionalbusinesses, “because there will be probably more customers outthere using private pay or using their own money for care, orthey'll be able to take advantage of contracts for care.”

Nursing homes, on the other hand, are “feeling the oppositeright now. Their Medicare and Medicaid reimbursements are goingdown,” Mr. Halvorsen said.

Looking ahead, Mr. Nichols surmised that 2010 will “probably beas bad as 2009″ in terms of insurance market conditions. “I think alot of people, myself included, would say we still have two orthree years left” for the property and casualty and health careindustries.

“It's not a great outlook,” he said, “but it's realistic, and Ithink we know that if we're positive about it, and we go out and doour jobs, there's opportunity,” he said, describing the “self-carepiece” as a “significant part of the wholesale segment of theindustry.”

Fran O'Connell, managing director-medical professional withMarkel in Deerfield, Ill., said Markel has been writing risks inthe specified medical professions area for close to 40 years.

She said the company writes a host of exposures that “run thegamut from health care staffing to clinics of any kind,occupational, urgent care, municipal health departments, clinicswithin a university and imaging centers.” It also coversindividuals like physician assistants, chiropractors andnaturopaths, she said.

“There is a lot of capacity. People are jumping into themarket,” Ms. O'Connell said. “I think everybody would tell youthat.”

When there is a lot of capacity in the marketplace, she said,“there is pressure on those carriers to grow the top line. When youdo that, there is pressure to book the business. That says there isa lot of pricing frenzy.”

She noted, however, that “when you have a lot of players in themarket all going after the same fish, it makes the fish prettylucky to pick and choose.”

From an underwriting perspective, she said, “we are firmbelievers in being careful to understand the risks we have. When itmakes sense, price it aggressively; if it doesn't, we'll probablyhave another opportunity to see it.”

She continued, “You have to know when to hold them and when tofold them because risks are not all as risk-free as you might thinkthey are.”

For example, she said, “What's done at a medi-spa couldpermanently scar you or it could kill you, and you don't tend tothink of that necessarily. You say, 'It's a spa, what couldhappen?'”

A medi-spa is a hybrid between a medical clinic and a day spa,operating under the supervision of medical doctor. Treatments vary,but laser treatments, micro-dermabrasion, and Botox and otherfillers are generally available.

Ms. O'Connell noted that as the population ages, “we're going tosee more aging-related services and home health.” She also expectsthat “because of the shortage of physicians, we will see physicianextenders providing more and more of the services.”

In addition, she believes many of the states that are now amongthe more restrictive in defining what a nurse practitioner orphysician assistant can do will ease back on thoserestrictions.

Mr. Twietmeyer said ACE Medical Risk has three divisions inaddition to the middle market segment that he manages. The othersare: a segment for miscellaneous medical facilities; a long-termcare segment, which consists of nursing home assisted livingfacilities; and the life sciences biotech division, which writesclinical trials for biotech companies.

“I support that [biotech] group by writing a package coverage,”he said.

A miscellaneous medical facilities groups division was startedin 2002, primarily going after lower-end health care classes, likehome health care, hospice facilities, nurse staffing agencies.

“We were very successful getting on the map with that,” he said.“It was perfect timing when St. Paul got out of the business.”

With that program, he said, coverage is filed and admitted,which he believes gives ACE a definite advantage in themarketplace. “Most of our competitors offer nonadmitted surpluslines product for home health care,” he said.

He noted that ACE Medical Risk, started in 2002, works withseveral specialty wholesalers, and focuses on those wholesalersthat are “devoted to the health care business,” who understand therisks and the business in general. The retail brokers as well, headded, are specialty driven in the health care business.

Regarding any possible implications of impending health carelegislation, Mr. Twietmeyer said that allied health insuranceproviders will have to wait for the language of the bill to gaugepotential outcome for their businesses. He added, however, “We lookat it like, if anything, health care exposures are going tocontinue to grow.”

“If Medicare and benefits get cut, for example, that will impactmy clients and insureds,” Mr. Twietmeyer said.