Med-Mal Insurer's Receiver Halts Claim Payments
By Gary S. Mogel
NU Online News Service, Feb. 04, 12:41 p.m. EST?A Virginia official said after taking over Reciprocal of America's operations he has temporarily halted claims payments by the medical malpractice and workers' compensation insurer.
Ken Schrad, director of the Virginia State Corporation Commission, which is now the receiver for ROA, which is based in Glen Allen, Va., said a moratorium has been placed on the payment of claims until the commission completes an evaluation of the insurer's financial condition.
In addition, he said, ROA will no longer issue new or renewal policies.
Mr. Schrad told National Underwriter that his agency had "just taken over ROA's operations and no comprehensive analysis had been completed yet." He noted that the insurer specializes in medical malpractice and workers' comp for hospitals and other health care providers–lines of coverage that have had poor loss ratios in Virginia and other states.
"ROA lost its reinsurance (from Bermuda-based First Reinsurance Ltd.) over a year ago, as the reinsurer no longer wanted to write those types of risks," Mr. Schrad said.
In a related development, Standard and Poor's Ratings Service lowered the counterparty credit and financial strength ratings of ROA and its attorney-in-fact, The Reciprocal Group, to "'R" from "Bpi." The "R" rating means that an insurer is under regulatory supervision.
ROA is licensed in 42 states, and operates in 18 states and the District of Columbia. In 2001, ROA had assumed the assets and liabilities of Coastal Insurance Enterprise, Coastal Insurance Exchange, and the Alabama Hospital Association and Healthcare Workers' Compensation Fund.
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