Pediatricians Insurance Risk Retention Group of America, Inc. (PIRRGA) is a District of Columbia-domiciled mutual insurance corporation formed in 2003 by its member pediatricians to offer non-assessable medical malpractice liability insurance policies.

F.A.Q.s	Risk Management	Ownership	Policies Offered	Service Providers
What is a Risk Retention Group (RRG)? What is the advantage of an RRG? Are there other doctor-owned insurance companies in the United States? Have these doctor-owned insurance companies been financially successful? Can doctors-members be held personally liable for any losses incurred by the insurance company? Who has regulatory responsibility for the RRG? What requirements does the DC Department of Insurance, Securities & Banking impose on an RRG? Why has PIRRGA been domiciled in the District of Columbia? Who is eligible to be insured by PIRRGA? What type of policies does PIRRGA write? Will PIRRGA continue to expand its geographical coverage? For how long am I committed to maintain my insurance coverage with PIRRGA? Can I finance my capital contribution to PIRRGA or my insurance premium? What is a mutual company? What are the advantages of a mutual company? How do I purchase an interest in a mutual insurance RRG? Is PIRRGA permitted to pay dividends to its members? Does PIRRGA have a Board? Who is the manager of PIRRGA? What expenses are incurred by PIRRGA each year? Who provides investment management services to PIRRGA? Are there annual financial audits of PIRRGA? Who reviews the adequacy of PIRRGA’s loss reserves? Who handles underwriting, policy decisions, pricing and application review at PIRRGA? What factors are considered in the underwriting process? Are members be required to meet underwriting criteria annually? Can a membership interest in PIRRGA be transferred? Are extended reporting periods or “tail” policies offered? Is PIRRGA a rated insurance carrier? Does PIRRGA participate in state insurance guaranty funds? Has PIRRGA obtained reinsurance? What are the Articles of Incorporation & Bylaws of the RRG? What is a Risk Retention Group (RRG)? A risk retention group ("RRG") is a liability insurance company that is owned by its member insureds and formed under the Liability Risk Retention Act, which was passed into law by Congress in 1986. The Liability Risk Retention Act (LRRA) is a federal law that helps U.S. businesses, professionals, and municipalities obtain liability insurance which had become either unaffordable or unavailable due to "liability crisis" problems in the United States, which had caused liability insurance to become either commercially unavailable or unreasonably expensive. Under the LRRA, an RRG must be formed and domiciled in one state. Once licensed by its state of domicile, an RRG can insure members in all of the states of the U.S., provided that it registers in each state. Because the LRRA is a federal law, it preempts most state regulation, making it easier for RRGs to operate nationally under uniform legislation. Under the LRRA, the membership of the RRG must be relatively homogeneous: operating in a similar business or profession (i.e., medical practitioners) which exposes them to similar risks. What is the advantage of an RRG? Since it is an insurance company owned by its members, an RRG permits the members to control the type of insureds it admits and the nature of the insurance programs that are offered by the RRG. Over time, and properly managed, this control can result in more effective loss control programs, lower rates and more stable coverage which is less susceptible to insurance market cycles and profit-taking by stockholder-owned profit-oriented insurance companies. In addition, if successful, the invested capital of the RRG can accrue to the benefit of the membership (for example, as a retirement fund), and surplus capital can be returned to the members. Most importantly, the members own and control the RRG. They have full visibility to its operations and finance, and can benefit financially from sound underwriting and good claims management. Are there other doctor-owned insurance companies in the United States? There are over 60 doctor-owned insurance companies in the United States. According to the Physicians Insurance Association of America (PIAA) "more than 60 professional liability (medical malpractice) insurance companies are owned and operated by doctors and dentists. Collectively, these companies insure approximately 60 percent of America's private practice physicians. These companies were established to provide affordable and dependable professional liability insurance free from the uncertainties of the commercial market. Today, the nation's physician and dentist-owned medical malpractice insurance companies dominate this market." Have these doctor-owned insurance companies been successful? Yes, without question. Doctor-owned or operated companies have proved to have specific advantages over commercial insurance carriers. Commercial companies are too often willing to settle unwarranted and frivolous claims, despite the resulting effect on the physician's professional reputation. Doctor-owned companies vigorously defend their insureds when peer review indicates that negligence was nonexistent. In addition, since physicians examine the claims, physician-owned companies used this information to develop effective and acceptable risk management programs. Physicians have invested in their companies with the hope that their contributions would be returned to them when these new companies were operating successfully. Many companies have repaid these contributions, and others continue to do so. Furthermore, savings that materialized through improved claims experience and efficient operation have been returned to doctor-policyholders either in the form of dividends or reduced premiums. Today, physician-owned or controlled insurers have become solid financial enterprises representing the predominant force in the marketplace. Most importantly, these companies still maintain their strong commitment to providing a safer and more cost-effective healthcare environment." Can doctors-members be held personally liable for any losses incurred by the insurance company? Absolutely NOT. PIRRGA is a "non-assessable" mutual company, which means that at no time will any member be liable for any losses incurred by the company. Who has regulatory responsibility for the RRG? The state in which the RRG is domiciled has primary regulatory authority over it. The insurance department of the domicile state is responsible to monitor both the RRG's compliance with the LRRA and any specific requirements of that state of domicile. PIRRGA is regulated by the District of Columbia Department of Insurance, Securities and Banking ("the Department"). The Department directly oversees the operations of RRGs, and has extensive and direct experience in RRG oversight. What requirements does the DC Department of Insurance, Securities & Banking impose on an RRG? RRG's are regulated by the state in which they are domiciled; however, under the federal LRRA of 1986, the Department does require that RRGs submit copies of key financial and actuarial documents including the Group's charter, license, plan of operation, and on an annual basis, audited financial statements and loss reserve analysis. These documents are routinely submitted as required. The Department is aware of PIRRGA's offerings, and supports its lawful and proper operation as a provider of medical malpractice liability insurance to pediatricians practicing in the various jurisdictions of the United States. Why has PIRRGA been domiciled in the District of Columbia? The District of Columbia has been chosen for the domicile for PIRRGA due to its favorable regulatory requirement, extensive experience in the successful regulation of RRGs, and because of its reasonable initial capital or surplus requirements for RRG formation. In addition, as one of the premier locations for captive insurance companies in the U.S., the District has a well-established infrastructure at both the private and public levels, including lawyers, accountants, and administrators well-versed in RRG operations, to help support PIRRGA. Who is eligible to be insured by PIRRGA? Only no-surgery pediatricians and groups of pediatricians and who meet the underwriting standards of the Company are eligible to become members of the Company, or pediatricians who practice in jurisdictions subsequently developed by the Company. A sole practitioner or a group of pediatricians becomes insured by PIRRGA at such time as he/she/they subscribe(s) with their capital and become(s) mutual owners of PIRRGA and has/have an effective insurance policy issued by PIRRGA. A person (or group) ceases to be an Insured and a Member at such time the Insured is no longer insured by the Company. What type of policies does PIRRGA write? PIRRGA today operates an insurance business providing professional medical malpractice liability insurance coverage with five different levels of policy limits: 1) $100,000 per patient occurrence and up to $300,000 in total annually; 2) $200,000 per patient occurrence and up to $600,000 in total annually; 3) $250,000 per patient occurrence and up to $750,000 in total annually; 4) $500,000 per patient occurrence and up to $1,500,000 in total annually; and 5) $1,000,000 per patient occurrence and up to $3,000,000 in total annually to pediatric applicants who become insured. The policy covers claims for which the insured pediatricians are legally responsible and which might arise out of acts or omissions in connection with the delivery of professional medical services. Separate coverage may be provided for a professional organization (e.g., a partnership or corporation). A single separate per patient and annual total limit applies to the organization. The policy does not cover fines, penalties or punitive or exemplary damages that an Insured may be required to pay and does not cover claims arising out of dishonest, fraudulent, criminal or malicious acts. PIRRGA provides coverage on a claims-made basis. Under a claims-made policy, an RRG provides coverage only for claims that are reported during the policy period and that relate to professional services that an Insured performed or should have performed after the retroactive date stated in the policy. For purposes of determining whether a particular claim is covered by the policy, it would be considered to have been reported to PIRRGA on the date that the accident or incident, which eventually gives rise to the claim, was first reported to PIRRGA. The policy generally covers claims arising out of actions occurring FIVE YEARS prior ("Nose Coverage" or "Prior Events Coverage") to the inception of coverage by the Company. Upon termination of its liability insurance policy, PIRRGA may also offer continuing coverage ("Tail Coverage") on a case-by-case basis to its Member pediatricians. To physicians who have been claims-free for at least 10 years and who are so approved by the company's Underwriting & Risk Management Committee, or who meet the requirements of the Company's Risk Management and Loss Prevention programs, PIRRGA may provide a discounted capital and premium policy relationship. By providing five years' prior events coverage, PIRRGA hopes to assist those physicians who have had to "go bare" due to extreme insurance costs, and to help those who might save cash by "going bare" prior to taking on insurance with PIRRGA. PIRRA has obtained reinsurance, which allows it to offer the five types of coverage limits outlined above.Final coverage terms and conditions of the policy are subject to change. Always refer to the policy form itself as controlling. A sample policy is provided in this information package. However, please note that individual policies may differ as to endorsements, exclusions and other elements. Read your policy carefully. Will PIRRGA continue to expand its geographical coverage? Florida and the other nine states in which PIRRGA is approved are attractive market for the RRG given that there are some 5,000 licensed and active pediatricians from whom to solicit membership. At this time, PIRRGA has approximately 10% of the Florida market. The company hopes to extend its offering of coverage to all states in the U.S. upon the development of actuarial analysis for its new proposed state markets, and subject to the approval of the RRG's Board of Directors for such expansion. Expansion of the geographical coverage through prudent application of stringent underwriting requirements benefits PIRRGA as it may enhance profitability, provide for diversification of risk and for an increase in surplus from new membership. Final geographical expansion requires the approval of the District of Columbia Department of Insurance, Banking and Securities. For how long am I committed to maintain my insurance coverage with PIRRGA? Members must maintain their insurance coverage with PIRRGA for a minimum of two years. In order to remain an insured, an eligible pediatrician will purchase insurance coverage from PIRRGA, regardless of the financial condition of the PIRRGA or the amount of the annual premium to be charged and regardless of the amount of the capital contribution that the Insured will make. The Board of Directors intends to set the annual premiums, which vary by county, at the lowest possible level required to maintain the actuarially determined fiscal integrity of the RRG. Can I finance my capital contribution to PIRRGA or my insurance premium? Several entities provide secured or unsecured, signature-based low-cost five-year term recourse loans for pediatricians to finance all or a portion of their capital contribution. The company itself provides for monthly premium installments at no additional finance charge. Under certain conditions the Company itself can finance a member's capital contribution. However, please note that the members' capital interest in PIRRGA cannot be pledged, transferred, assigned or hypothecated to any party. What is a mutual company? Unlike a stock company, a mutual insurance company, such as PIRRGA, does not offer shares of stock. Rather, it is operated and maintained for the benefit of its members, or policy owners. All members have the right to vote for the Company's Board of Directors and to receive a fair share of the dividends declared by the Board, if any are declared. The members are contractually allowed to share or "participate" if the company makes distributions. All distributions require regulatory approval. What are the advantages of a mutual company? Mutual insurance companies are governed by basic articles, bylaws and membership agreements established by its members. These rules permit governance arrangements tailored to the mutual company's business purposes. A mutual company reports its profits in terms of gains from operations. If, after paying expenses, claims, and other liabilities, a mutual company accumulates more funds than are necessary to cover the policy reserves (which provide for future insurance obligations), it has a surplus. How do I purchase an interest in a mutual insurance RRG? A new policyholder joins PIRRGA by making a capital contribution to surplus generally expected to be equal to 50% of the policyholder's annual insurance premium. This contribution is allocated to that policyholder's capital account and the doctor then becomes a member. Each year, profits and losses, including investment gains and losses, are allocated to each member's capital account. As a mutual company, PIRRGA will be required to pay federal income and state premium taxes where applicable. Is PIRRGA permitted to pay dividends to its members? As a mutual company, PIRRGA may pay, and hopes to pay, dividends to policyholders out of its surplus, but not without the prior approval of the District of Columbia Department of Banking, Insurance and Securities. Does PIRRGA have a Board? PIRRGA has a Board of Directors that currently consists of seven and will have as many as nine directors. For more information about PIRRGA's Board of Directors, please click here. Who is the manager of PIRRGA? Medical Development and Management Co, Inc. ("MDMC"), a privately owned corporation domiciled in Delaware, with its principal office in Miami, Florida, is the manager for PIRRGA reporting to the Board of Directors. MDMC is responsible for marketing, underwriting, policy administration, billing and claims management functions for PIRRGA in accordance with the policies established by its Board of Directors. MDMC receives management fees for its services. These fees consist of a base fixed fee plus variable fees based on the number of insured doctors. PIRRGA has also contracted with Risk Services, LLC of Sarasota, Florida to provide certain administrative, accounting and other functions to support its operations. Risk Services, LLC is an insurance brokerage and management company, and has extensive experience in the creation and management of risk retention groups such as PIRRGA. Two principals of MDMC will serve on the PIRRGA Board of Directors. Gene Rosov is President of PIRRGA and Michael Mazzola is PIRRGA's Treasurer. What expenses are incurred by PIRRGA each year? Fees paid to MDMC and Risk Services for management and administrative services vary based on the number of insured doctors but is expected to be approximately 25% of the gross written premium. Fees and other expenses including Board fees and expenses, audit, legal (excluding claims-related), actuarial and other administrative services are not included in the fees paid to MDMC or Risk Services. Start-up expenses of approximately $250,000 were funded at the initial closing. Who provides investment management services to PIRRGA? The assets of PIRRGA are managed by UBS, a global investment banking and securities firm and a nationally recognized, professional, third-party asset manager. The Board of Directors and the Treasurer has contracted with UBS to invest the company's assets in accordance with investment policies which have been developed and approved by the Investment Committee of the Board. The investment portfolio is conservatively managed with investments predominantly in a diversified portfolio of short to medium term, investment-grade, fixed-income securities issued by corporations, governments and agencies. Are there annual financial audits of PIRRGA? PIRRGA provides an audited annual financial statement to its members on a calendar year basis. The Audit Committee of the Board determined and approved the selection of an independent auditor, Saslow, Lufkin & Buggy of Burlington, Vermont and Avon, Connecticut, an auditing firm with extensive experience in the RRG insurance industry. The annual audit fee will be paid by PIRRGA. The District of Columbia and each jurisdiction in which the company writes policies require that such an audit be filed annually with the DC Department of Insurance, Securities and Banking. Who reviews the adequacy of PIRRGA's loss reserves? Mercer Risk, Finance & Insurance Consulting, a Marsh & McLennan Company ("Mercer"), provides an annual actuarial review and loss reserve analysis for PIRRGA as of the end of each fiscal year. This loss reserve analysis must be filed annually with the District of Columbia Department of Insurance, Securities & Banking and with the other states in which the company writes policies. The fee for this service will be paid by PIRRGA. The Underwriting and Risk Management Committee will review and approve the retention of the actuarial service provider annually. Mercer was retained by MDMC to prepare the actuarial analysis required to initiate the licensing process with the insurance department of the District of Columbia, and is the largest and one of the most respected actuarial firms in the United States. Who handles underwriting, policy decisions, pricing and application review at PIRRGA? All applications are initially reviewed by MDMC to determine compliance with the underwriting guidelines established by PIRRGA's Underwriting and Risk Management Committee (URMC), and all applications are reviewed and approved by the URMC. The underwriting process may include an on-site review and includes preparation of an underwriting file for each potential insured. MDMC presents its recommendations for eligibility to the Committee, including pricing of the policy, which will make a decision as to acceptance. If appropriate, a quotation as to the amount of the required capital contribution and the annual premium is presented. An individual becomes an insured of PIRRGA upon payment of the required annual premium installment and the required contribution to surplus and finally upon the issuance of a policy of insurance. What factors are considered in the underwriting process? MDMC, in conjunction with PIRRGA's Underwriting and Risk Management Committee, evaluates the degree of underwriting risk associated with each application for insurance on the basis of documentation review, and accepts or rejects the proposed member. The PIRRGA Underwriting and Risk Management Committee has adopted underwriting standards to be applied in determining the acceptance or rejection of eligible pediatricians for insurance. Underwriting standards developed by the Company are applied in evaluating applications for insurance and determining possible underwriting actions. Various factors are considered, including the prospective Insured's county of residency, the recommendation of MDMC's review team, and the claims history of the individual prospective Insured and his/her practice. Are members required to meet underwriting criteria annually? Insureds must be evaluated and policies underwritten each year. Pursuant to the Company's underwriting standards, Insureds may be required to participate in loss prevention and risk management education programs adopted by PIRRGA and will work with the Underwriting and Risk Management Committee on annual or semi-annual practice reviews. Insureds may earn premium refunds through participation in the Company's loss prevention and risk management education programs. Can a membership interest in PIRRGA be transferred? No, there are substantial restrictions on transfer. Are extended reporting periods or "tail" policies offered? In the event of cancellation or non-renewal of a policy by an Insured or by PIRRGA for a reason other than non-payment of Annual Premiums or contribution to surplus, the Insured has the right to purchase for an additional premium an extended reporting policy, more commonly referred to as a "tail policy," provided such Insured requests the policy in writing within 30 days of policy cancellation or non-renewal. If, however, an Insured's policy is rendered void for reasons of fraud, such Insured will not be permitted to purchase the extended reporting policy. Pursuant to this extended reporting policy, the RRG allows the reporting of claims made after the cancellation or non-renewal of the expiring policy, but which arose from acts that occurred on or after the retroactive date of the Insured's expiring policy coverage and prior to the termination of the expiring policy term. The length of the extended reporting period and the premium to be charged for the coverage will be determined based upon the rules and rating plans in place at the time the extended reporting policy begins, as well the amount of such premium to be charged. Such benefits will be provided at no charge to Insureds who become totally disabled, to the beneficiaries of Insureds who die, and to Insureds who retire at any age after having continually been insured with the Company for the previous five years. Is PIRRGA a rated insurance carrier? For some period of time, PIRRGA will not have a financial strength rating from A.M. Best Company. Once PIRRGA has demonstrated a successful operating history it will seek such a rating. Does PIRRGA participate in state insurance guaranty funds? As a risk retention group under the federal Liability Risk Retention Act, PIRRGA is exempt from most of the insurance laws and regulations of jurisdictions other than the District of Columbia. Accordingly, Insureds do not receive the benefits that such regulation might provide, including the benefits of state insurance insolvency guaranty funds established under state law for the purpose of paying the claims of policyholders whose insurance companies become insolvent. Has PIRRGA obtained reinsurance? PIRRGA has obtained reinsurance through the assistance of Risk Services, LLC, and has in place an agreement to provide all policies with reinsurance in excess of claims of $125,000 through the engagement of Aspen RE (a NYSE "A" rated reinsurance carrier) and a Lloyd's of London syndicate (an "A-" rated insurance carrier syndicate). What are the Articles of Incorporation & Bylaws of the RRG? Corporate Bylaws Articles of Redomestication (Incorporation) The information contained within this page is for informational purposes only. Neither this page, nor anything contained in this page, should be construed as an offer to sell or a solicitation of an offer to purchase securities or other instruments.