Coverys Annual Report 2023
A Focus on Momentum
ANNUAL REPORT 2023 A FOCUS ON MOMENTUM ®
A FOCUS ON MOMENTUM Actions create momentum. Each seemingly small step builds upon the next, generating a series of victories, creating energy and velocity until the spark of momentum takes over. In 2023, our team created momentum with a multitude of actions. While some of our actions were foundational and others were transformational, every step advanced our mission to support and protect the healthcare community. Many of our actions were in response to evolving demands in the healthcare and liability insurance industries, including: • The arti昀椀cial intelligence (AI) and machine learning revolution. • A heightened level of data analytics and intelligence. • Growing patient expectations. • A challenging insurance market. • The ominous threat of nuclear verdicts and social in昀氀ation. • Reversal of tort reform. While some may see these factors as challenges, we view them as accelerating forces that increase our momentum and potential to serve our customers and business associates. We have quickened our pace of change—strengthening our claims defenses, maturing our data strategies, increasing our customer understanding, sharpening our risk management, broadening our solution suite, and tailoring our services. As a company, we are focused on pro昀椀table growth to ensure 昀椀nancial strength so we can support and protect our policyholders if and when a catastrophic claim arises. At the same time, growth in surplus provides the capital needed to develop and deliver innovative products and services to help customers navigate emerging exposures and mitigate risks before they materialize. In addition, strong 昀椀nancial performance supports the important work of the Coverys Community Healthcare Foundation, Inc. With a relentless focus on technology, intelligence, and talent, we are building momentum for our team, our agents and brokers, healthcare professionals, and the global communities we serve. Brenda E. Richardson, MD Joseph G. Murphy Chair of the Board CEO & President 22
ACTIONS CREATE MOMENTUM 3
A FOCUS ON MOMENTUM SOLUTIONS + COLLABORATION SOLUTION-FOCUSED PROTECTION The rate of change, challenges, and liability exposures for healthcare organizations and providers has never been greater—from the way healthcare is delivered, to staf昀椀ng shortages, increased severity of cyberattacks, and more. Coverys has taken action to address today’s challenges and enhance support services for providers and our agents and brokers. Our approach is solution-focused. We have expanded our insurance products to provide a wide breadth of options supported by experts who understand the unique coverage needs of providers and health systems. In addition to our robust and highly customizable medical professional liability insurance options, we provide creative solutions through our London presence and excess and surplus lines markets to help agents and brokers meet the needs of their clients who prefer those coverage options. We also offer captive and high-deductible coverage options, supporting policyholders who want to share in their risk by exercising even more control over their total cost of risk. Coverys also offers employer stop loss (ESL) coverage to healthcare providers with self-insured health plans, and provider excess loss and Medicare Shared Savings Program (MSSP) insurance protection. All Coverys coverage placements include specialized risk management, education, and analytical services designed to improve clinical, operational, and 昀椀nancial outcomes. We are focused on a customer-centric culture at Coverys. Our people care deeply about our policyholders, and our business development and underwriting teams have a strong focus on relationships with the agent and broker community. We’re focusing on these relationships to help build on success for the future. Bill Chapdelaine, Sr. VP of Business Development and Distribution 4
ACTIONS=MOMENTUM In addition to expanding our solution portfolio, we have refocused on underwriting acumen and are taking the following actions: Customer-focused underwriting 360-degree decisions We restructured our underwriting teams to provide We’re now aggregating data from across the organization more expertise by practice area, including physicians, to inform individual account decisions and portfolio healthcare facilities, and allied health providers. strategy. This specialization helps us more precisely address each healthcare provider’s unique coverage and risk Enhanced agent/broker portal and easier processes management needs. We invested in technology to improve our agent/broker portal and facilitate easier claim reporting. Sharper risk selection and pricing models We re昀椀ned our risk appetite and underwriting guidelines to ensure we have the 昀椀nancial strength to support our policyholders. A Broad Portfolio of Solutions to Address Evolving Exposures MEDICAL MPL EXCESS & COVERYS PROFESSIONAL SURPLUS LINES LONDON LIABILITY INSURANCE Offers robust insurance and reinsurance Offers sophisticated insurance and For physicians, hospitals, healthcare options across a broad range of medical reinsurance options across a broad range systems, facilities, dentists, podiatrists, professional liability and healthcare lines. of medical professional liability and allied healthcare, corporations, and more. • Risk-based solutions healthcare lines, with risks underwritten in the U.S. • Managed poplulation-based programs • Direct contracting organizations PROVIDER EMPLOYER REINSURANCE EXCESS LOSS STOP LOSS SERVICES For physicians, hospitals, healthcare • Tailored underwriting approach for Flexibility to provide risk transfer in systems, facilities, dentists, podiatrists, proactive risk mitigation multiple ways, such as utilization Coverys’ allied healthcare, and corporations. captive cells or facultative reinsurance • Self-funded employers of customers’ own captive insurance companies. 55
A FOCUS ON MOMENTUM STRATEGY + SUPPORT PREPARING TO PROTECT The stakes have never been higher. In a world of social in昀氀ation and nuclear verdicts, even small oversights can result in seven-昀椀gure trial judgments. And so, in 2023, we took a no-holds-barred approach to strengthening our defenses and standing shoulder to shoulder with our insureds. As a result, we’re responding faster and strategizing earlier, making data-driven defense decisions and using our talent where it matters most—to coach and support our insureds—safely shepherding them through a time of great adversity. At Coverys, we never lose sight of the human cost of claims. When healthcare providers are accused of harming a patient, it undermines everything they stand for—creating confusion and uncertainty. It is in these moments that the strength of an insurance company’s character is revealed. And it is in these moments that Coverys shines. Our insureds know they are not alone. We walk alongside them throughout the claim journey, helping them advance con昀椀dently with comprehensive preparation, coaching, information, and advocacy. We believe that a claim should never distract healthcare providers from their purpose to provide the best care possible to their patients. Coverys insureds are free to focus on medicine, patients, and compassion because they know, without a doubt, that we are prepared to support them. I want to thank you very, very much for everything you did for me during this very difficult case. Even outside the courtroom, you gave me encouragement, guidance, and counsel. I can’t thank you enough. Coverys Insured 66
At Coverys, we bring our best-in-class expertise and talent to every claim, fighting to achieve the right outcome and walking with our clients to resolve the negative impact inherent in being the target of a claim. Brian Farrell, Senior Vice President, Claims ACTIONS=MOMENTUM When a claim occurs, healthcare professionals are thankful to have Coverys in their corner. Over the past year, we have taken many actions to fortify our already outstanding claims service. Easier Claim Reporting Earlier Trial Vetting Unwavering Empathy Implemented streamlined reporting Enacted earlier case review Continued our practice of thoughtful, process and created a dedicated protocols, months ahead of trial, continuous communication with the intake team. to objectively assess the strategy, insured, through every step of their odds, risk of a nuclear verdict, claim journey. Best-in-Class Talent and the best path to prevail— Expanded our claim consultant whether that means reasonably Sharper Intelligence team and reduced caseloads to settling or litigating. Increased analysis of trial venues, improve service and strengthen past verdicts, settlements, and our proactive stance. Robust Defense Attorney Selection trends for similar claim types to Enacted more stringent protocols inform objective, strategic litigation Fierce Advocacy to ensure our team of attorneys are decisions. Continued our service model collaborative partners who share our of providing a dedicated claim strategic and creative approach. Smart Technology consultant from notice of Launched AI and other technologies loss through claim resolution. Thorough Witness Preparation to increase backend ef昀椀ciency and Consultants attend every day of trial, Added coaching services to help free our talent to focus on taking supporting insureds and providing insureds testify con昀椀dently, avoid exceptional care of the medical invaluable courtroom insights to traps, and deliver clear, truthful providers we serve. defense attorneys. explanations. 77
We are focused on ensuring the experience of our policyholders, agents, and brokers is second to none. The actions we’ve taken to analyze data, review processes, and improve how we go about our day-to-day business enhances customer service and helps our clients reduce their risks. Dana Siegal, Vice President, Risk Management & Analytics INTELLIGENCE + INNOVATION TRANSFORMING SERVICE 2023 will be remembered across the industry as a groundbreaking year for technology. Advances in AI and machine learning have ushered in new possibilities for underwriting, service, risk management, claims, fraud detection, and more. At Coverys, we're taking a thoughtful, business-driven approach so we can continue our investment in AI and robotics to achieve process ef昀椀ciency within our company and strategically enhance our broker, agent, and policyholder experiences. The actions we've taken to leverage data analytics, improve processes, and make it easier to do business with us are both elevating service levels and helping policyholders reduce risks so they are free to focus on medicine. As we innovate, we are ever mindful of our customers—agents, brokers, and policyholders. We are driven to increase our understanding of our customers' challenges and aspirations and are continuously exploring ways to leverage the power of AI and robotics to tailor solutions that precisely meet our customers' needs. While Coverys has always been a data-forward organization, we know that data is only as valuable as the decisions it inspires, and that decisions can only be effective if they are informed by the contexts in which they are made. To that end, we are evolving our data-driven strategies—striving to move beyond descriptive or diagnostic analytics to predictive insights that drive informed business decisions and strategy. By advancing our data-driven intelligence and tech-enabled agility, we can engage our customers in ways that are increasingly targeted, tailored, and impactful. 88
ACTIONS=MOMENTUM Expanded risk management New Enterprise Project Management Transformative data intelligence expertise (EPMO) of昀椀ce We’re using arti昀椀cial intelligence With years of industry experience, This team is helping us to to identify insights from an array Dana Siegal has taken the helm quickly and effectively streamline of large datasets so that we can as our new Vice President of Risk processes, enabling us to create improve our understanding of the Management and Analytics. ef昀椀ciencies, increase capacity, risk factors and opportunities that harness deeper intelligence, and impact our customers and the provide even greater value for our healthcare community. agents, brokers, and policyholders. Integrated Risk Management Services To address new and persistent exposures in the ever-evolving 昀椀eld of healthcare, our risk management, analytics, and education teams provide an integrated and actionable platform Deep-Dive of risk mitigation services for agents, brokers, Clinical Analytics and policyholders. Each of our four service Expert lines in the platform, offer a breadth of valuable Consultation resources and tools that can be used individually & Assessments or integrated across all service lines to create a COVERYS dynamic risk mitigation program. Integrated An example of this integrated approach is the Risk Mitigation partnering of our Clinical Data Analytics and Platform in-depth Clinical Risk Assessments. While each Robust & service offers a powerful tool to identify areas Accessible for risk mitigation and safety improvements, Resources when combined, we harness the insights of Industry-Leading Education the clinical data analytics to customize a risk assessment that focuses on the speci昀椀c areas of risk that are driving your organization’s/providers’ claims experience. This allows for actionable risk recommendations from our Expert Consultation Team and Targeted Education that provides the best opportunities for risk mitigation that results in the reduction of claims. Our education programs are developed by our expert risk consultants and award-winning Med-IQ® education team, providing on-site education programs customized to your speci昀椀c risk needs and concerns, CME/CE certi昀椀ed online courses for frontline clinicians, and professional development programs for your risk team. Together we're 昀椀nding new ways to help healthcare professionals reduce claims by mitigating risks on the front line. 9
A FOCUS ON MOMENTUM PASSION + PARTNERSHIP DEFINING THE COVERYS WAY Knowledge sharing, bottom-up innovation, customer focus, and creativity are just a few of the Coverys culture’s de昀椀ning qualities. A culture we describe as The Coverys Way. As a leader in medical professional liability insurance with 49 years of experience, Coverys’ mission is to support and protect the healthcare community. While there are many reasons we’ve succeeded for 昀椀ve decades, one stands out: We are passionate about protecting healthcare professionals. Our team is comprised of people who care deeply—not just about how to do their jobs, but also about how to do right for our insureds and the healthcare community at large. Together, we embrace change, think forward, and seek solutions. Our focus in 2023 has helped set the foundation for future momentum, leveraging our team’s expertise and talent, and setting our North Star on continuing to grow the business with our agents and brokers that we stand alongside, while supporting our vision of “Better outcomes for the professionals we serve and our communities around the globe.” And these efforts do not need to be mutually exclusive. We believe and know we can accomplish both. We have embedded this purpose into our culture with a rallying cry: The Coverys Way. The idea of focusing on people, purpose, and performance guides us in our delivery. Coverys team members are here for a reason: They believe that the work and service that Coverys provides matters. We also believe that the talent and expertise that we provide makes a difference to our customers. Our mission and vision serve as the foundation of our company’s culture, while our core values (the four C’s) are the compass that guides our decisions and actions. We have a commitment to We place an emphasis on understanding, supporting, building trust and long- and respecting our colleagues, lasting relationships. We customers, business partners, understand the importance Care and communities. We are Connection of open communication and compassionate and charitable. being responsive, 昀氀exible, and solution-oriented. We have a culture that We believe in progress, encourages working together innovation, and learning. to generate new ideas and We focus on improving and Collaboration creative solutions. We ask for Continuous developing products, services, and listen to feedback as a way Development and ourselves. to achieve better outcomes. 10
ACTIONS=MOMENTUM Coverys actively supports a company culture where all are valued for who they are. Inspired by our customers, employees, and collaborators, we are solidly committed to extending diversity, equity, inclusion, and corporate citizenship across our businesses and into the world. Diversity, Equity, & Inclusion (DE&I) Advisory Council The DE&I Advisory Council is an employee-led group that volunteers to drive and sustain Coverys’ commitment to diversity, equity, and inclusion. Last year, the DE&I Advisory Council conducted its 昀椀rst in-person workshop and met with senior leaders to reaf昀椀rm Coverys’ commitment to an inclusive culture. All participants are individually and collectively committed to embedding DE&I into Coverys culture. At Coverys, DE&I is a fundamental part of our culture and remains an essential priority. Coverys’ implicit bias training, formation of employee affinity groups, and commitment from senior leadership fosters diversity of thought, inclusion of voices, and equitable practices which help us to gain a better understanding of our internal and external customers. Jenelle Arnao, Risk Management Consultant 11
A FOCUS ON MOMENTUM MAKING AN IMPACT 12
ACTIONS=MOMENTUM Increasing Inclusivity in Healthcare ® Over the past year, Med-IQ , Coverys education company, engaged a diverse group of faculty experts, social media in昀氀uencers, and organizations to create education for policyholders, risk managers, healthcare providers, and the public that intentionally and meaningfully addressed health disparities, medical mistrust, and the harmful legacies of systemic racism in healthcare. Speci昀椀cally, in 2023, Med-IQ launched courses on a variety of DE&I issues, including: Racial and Ethnic Disparities in Maternal Healthcare. • Ethical Healthcare for Transgender Individuals. • Racism and Implicit Bias: Legacies and Applied Concepts. • By engaging strategic experts in the development of programming with relevance to a broad base of stakeholders— from clinical teams, to patients, caregivers, and the public—Med-IQ's educational interventions play a vital role in improving care quality and safety, reducing stigma, promoting patient empowerment, and bringing better healthcare to underserved and marginalized communities. Coverys Community Healthcare Foundation, Inc. In 2023, the Coverys Community Healthcare Foundation Colorado West Regional Mental Health • (CCHF) provided over $2.8M in charitable donations Provided funding to enhance client access and and grants to healthcare organizations and community experience for telehealth treatment. groups focused not only on improving the safety and ef昀椀cacy of patient care, but also on addressing some Community Focus: of our communities’ most urgent needs. A sample of grants and donations this year included: Greater Lansing Food Bank • and Baltimore Hunger Project Healthcare Focus: Provided funding to help communities address food insecurity. March of Dimes • Helped fund a research pilot evaluating the ef昀椀cacy Maui Foodbank • of low-dose aspirin for pregnant mothers to reduce Provided funds to help support wild昀椀re victims. the incidence of preeclampsia and premature birth. Addressing Gun Violence • Beth Israel Deaconess Medical Center • Donated funds to support victims of gun violence in Helped fund a study that tested the utilization of our communities. patient data and machine learning tools to identify those at highest risk of hepatocellular carcinoma Maternal Health • (liver cancer). Internationally, we provided funding to support expanded maternal health services to rural The Schwartz Center • communities in Haiti. Helped fund Compassion Cultivation Training at Massachusetts General Hospital. 131313
2023 ANNUAL REPORT FINANCIAL HIGHLIGHTS SUMMARY TOTAL ASSETS DIRECT WRITTEN PREMIUM 2022 2023 2022 2023 $3,991,940,609 $3,845,552,576 $735,847,164 $649,911,555 NET INCOME POLICYHOLDER SURPLUS 2022 2023 2022 2023 ($52,938,670) $76,033,281 $1,478,321,513 $1,539,127,051 CLAIMS PAID (NET) CLAIMS RESERVES (NET) 2022 2023 2022 2023 $349,867,056 $376,715,159 $1,828,354,142 $1,742,368,181 Financial highlights as of December 31, 2022, and 2023, for all Coverys group insurance companies, including af昀椀liated companies (Coverys Risk Retention Group, Inc.). 1414
GOVERNANCE & LEADERSHIP As of December 31, 2023 * BOARD OF DIRECTORS LEADERSHIP Brenda E. Richardson, MD Kenneth A. Heisler, MD, FACS Joseph G. Murphy Chair of the Board Chair Emeritus, Director Emeritus, President & Chief Executive Of昀椀cer Consultant to the Board Michael W. Louge Elizabeth B. Brodeur Vice Chair of the Board Michael J. Casella Senior Vice President & General Counsel Consultant to the Board Michael B. Driscoll Catherine A. Donahue Secretary of the Board Peter T. Robertson, Esq. Chief Operating Of昀椀cer Director Emeritus, Michael Apkon, MD, PhD, MBA Consultant to the Board Todd C. Mills Chief Financial Of昀椀cer Craig L. Best, MD, MPH Ronald W. Dunlap, MD Director Emeritus Joseph P. Sullivan, Jr. Daryl W. Bradley Chief Underwriting Of昀椀cer James J. Moran, Jr., Esq. Theodore A. Calianos, II, MD, FACS Director Emeritus Scott E. Weber Head of Strategy & Corporate Development John H. Gillespie Donna M. Norris, MD Director Emeritus William A. Chapdelaine Alka Kohli, MD, MBA, FACOG Senior Vice President, Robert K. Sheridan, Esq. Business Development & Distribution Brian J. Spero, Esq. Director Emeritus Annick Charles Alexander Strachan, Jr., MD, MBA Senior Vice President, Medical Professional Liability Eric M. Crockett Senior Vice President, Information Technology Noreen F. Sarno Senior Vice President, Human Resources José R. Zorola Head of Diversity, Equity, & Inclusion * Medical Professional Mutual Insurance Company 15
ANNUAL REPORT 2023 COVERYS.COM
