“We have intentionally chosen to partner with brokers to distribute our product as we believe they can add value by providing independent advice and service to doctors who are very busy and will see the benefits of having an adviser,” says Eric Lowenstein, CEO of Tego Insurance.
Tego revealed in August this year that it had an exclusive underwriting partnership with Berkshire Hathaway Specialty Insurance (BHSI) to provide medical indemnity insurance.
It is an area ripe for disruption too. Medical indemnity has traditionally been direct, with brokers playing a minor role.
Lowenstein explains that there is also an element of inertia, with doctors staying with existing providers “because there is an expectation that they will do the right thing and it is preferable to spending personal time investigating the details of different insurance covers”.
“Doctors are first and foremost a community of highly educated, skilled and committed professionals. However, by the nature of their work, they can be time poor when it comes to the administrative aspects of their professional life, such as insurance. Sometimes they rely on others (partners or practice managers) to source the information for them.
“Tego has also created an exciting opportunity for the broking community by giving them a new way to engage with clients.”
Indeed, the Australian medical indemnity market is estimated to be an annual gross written premium of between $350 million to $400 million, Lowenstein claims.
“Tego has been studying the medical indemnity market for many years, waiting for the right insurance partner to work with to bring a new offering to the market,” he says.
And along came BHSI which entered the general insurance market last year. This was the “catalyst”, says Lowenstein, as BHSI had the international experience in this line of business. What followed was 12 months of studying the market and consultation before the actual launch.
What’s the difference?
What makes Tego different is that it is “unencumbered by legacy”, Lowenstein notes. “We have the opportunity to think differently and we aim to be highly responsive to the needs of doctors to bring a new and different perspective to risk selection, pricing, claims and cover.”
He says that Tego will be looking at each risk on its own merits, resulting in tailored pricing and cover that can make it really interesting for doctors.
“Importantly, the team who look after Tego’s clients and provide the 24/7 medico-legal advisory service have many years of experience in the Australian medical indemnity industry. They have a genuine passion for the medical profession, really understand the Australian practice environment and are well known and respected by their medico-legal peers.”
The nuts and bolts
So what is this new offering?
First, Tego does not have common renewal dates. This means that doctors can switch or renew with the company at any time of the year and also have the option of extended policy periods of up to 16 months.
“Secondly, our unique approach to pricing recognises that no two doctors are the same,” Lowenstein says. “Tego assesses each doctor on their individual merits… This removes cross-subsidisation that can occur with community pricing models. For example, if a doctor’s estimated billings were $380k, then our premium would take this into consideration rather than a generic billing band of ‘less than $500k’. We also would not impose any mid-term or retrospective increases if the doctor’s estimated billings end up being higher.”
In terms of coverage, Lowenstein says the product covers new exposures that come from developments in the medical space.
For example, the use of technology in day-to-day medicine has meant doctors are working through virtual rooms or using telemedicine as part of standard practice.
We aim to be highly responsive to the needs of doctors to bring a new and different perspective to risk selection, pricing, claims and cover.
“Technology has blurred the lines between borders and by having access to a global carrier like BHSI we have the capability of growing with a doctor’s practice beyond the jurisdiction of Australia,” Lowenstein explains.
Another example of new risks that doctors face is breaches of privacy and costs involved in engaging with the Privacy Commissioner, as well as any potential breach fines and penalties. Only recently, a doctor had to pay $10,000 in compensation to a patient for a privacy breach.
Lowenstein adds that Tego’s product not only covers fines and penalties, defence costs are included too.
In addition, there’s coverage for certain breaches of consumer, environmental and workplace health and safety laws.
Finally: “With the rise of practitioner comparison sites that include patient reviews, we understand the importance of a doctor’s professional reputation, so we have included cover for defamation arising out of social media and the cost of engaging a public relations consultant to help safeguard reputation,” says Lowenstein.
So far, Lowenstein says the company is “really encouraged” by the initial positive response. “We are very confident that doctors will appreciate the additional choice, our highly responsive interactions and the value that brokers can bring to the relationship.”
Importantly, he stresses brokers will be key in making it easy for doctors and medical practices to access product and price comparisons that will “clearly demonstrate the advantages” of Tego’s offering.
“We have been spending time with brokers to ensure they understand our offering and rolling out broker packs and training sessions to give them the resources and confidence they need to engage doctors in a meaningful way,” Lowenstein says. “Because it’s a new segment for most brokers it is important they understand our product and value proposition.
“While it may take some time to build the same level of trust that the traditional providers enjoy, Tego’s focus on providing value to the individual is a welcome approach in the market and coupled with the expertise of the team, delivers a genuine alternative.”