New Insurance Program Helps Protect Health Care Organizations From Increased Liability and Crime-Related Risks
WARREN, NJ, September 14, 2005 - A new portfolio of insurance coverages from the Chubb Group of Insurance Companies can help
health care organizations minimize the costs associated with their increased exposure to management-related liability and
crime-related risks.
"Chubb's Health Care PortfolioSM is the only portfolio product in the market designed specifically for the needs of not-for-profit and private for-profit
health care organizations," said Beth Strapp, a vice president of Chubb & Son and health care industry practice leader for
Chubb Specialty Insurance. "For more than two decades, Chubb has offered innovative insurance solutions to the health care
industry. Our new portfolio of insurance coverage builds on our previous offerings and further demonstrates our expertise
and knowledge of this complex industry."
Chubb's Health Care Portfolio includes five coverage sections and a variety of options available within each to help address
an organization's unique needs. The five coverage sections include directors and officers liability (including optional entity,
employment practices and third-party liability coverages), fiduciary liability, crime, kidnap/ransom and extortion, and outside
directorship liability. Insurance protection can be customized by selecting among these coverage sections. Separate limits
of liability and retentions are available with respect to each coverage section.
"We have seen society's standards for professional performance become more and more demanding. Government regulations have
raised the bar in health care with demands for improved corporate governance and quality of care," said Strapp. "In today's
litigious environment, health care organizations are financially stretched to the limits and can ill afford the financial
drain of a liability lawsuit, an extortion attempt or employee theft."
Strapp notes that health care organizations and their directors, officers and employees face a growing number of diverse risks.
Legislation like the Sarbanes-Oxley Act, which imposes strict corporate governance requirements on large for-profit corporations,
is pending in many states with respect to not-for-profit organizations. Passage of such legislation could lead to additional
liability and potential claims against many not-for-profit health care organizations. According to Tillinghast-Towers Perrin's
2004 Directors and Officers Liability Survey, health care organization directors and officers are, on average, at least 10
times more likely to be sued than their counterparts in most other industries. The Employee Retirement Income Security Act
of 1974 (ERISA) creates significant fiduciary accountability - even holding fiduciaries personally liable for losses. In
addition, fraud and embezzlement in the workplace continue to rise. According to the Association of Certified Fraud Examiners,
organizations lose an average of 6% of their total annual revenue to employee fraud.
"No health care organization is immune to these and other liability exposures," said Strapp. "Chubb's Health Care Portfolio
is designed to give these organizations the protection they want in one package that they can tailor to fit their needs."
Features of the new program include:
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One simplified, electronic application for all coverages.
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Expanded definition of "insured person" includes independent contractors and in-house general counsel, which are now covered
in the directors and officers liability coverage section which includes optional employment practices liability coverages.
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Coverage for "defense costs" under the directors and officers liability coverage section, up to the available limits of liability,
for otherwise-covered claims alleging violation of the Health Insurance Portability and Accountability Act, Emergency Medical
Treatment and Active Labor Act, or Internal Revenue Code, or involving excess benefit transaction excise tax violations; as
well as sublimits for certain fines and penalties under such statutes.
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Broadened definition of "employee" includes leased employees.
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No exclusion in the directors and officers liability coverage section for regulatory-related retaliation claims.
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No exclusion in the directors and officers liability coverage section for employment claims or third party claims alleging
dishonesty/fraud/willful violations of the law.
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Full severability of the application for insured persons.
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Kidnap/ransom expense coverage for abduction of infants and children (younger than age 10) triggers coverage without a monetary
demand requirement.
The member insurers of the Chubb Group of Insurance Companies form a multi-billion dollar organization providing property
and casualty insurance for personal and commercial customers worldwide through 8,000 independent agents and brokers. Chubb's
global network includes branches and affiliates in North America, Europe, Latin America, Asia and Australia.
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