2018 Miscellaneous Medical Facilities Insurance Marketplace Update

So our presentation’s on miscellaneous medical
pool. How many people are in it? For those that are in the industry, they understand
that a broker today on a simple surgery center risk, they can get up to 40 quotes. So as a company, you have to look at that
and say, “How do I differentiate myself in this industry?” I think more people are looking to stay at
home if they can, right? And I think parents of…or people that have
older parents are looking to maybe keep those people out of those homes. I think that’s been a lot of it. I also think the housing crisis. When I look back at ’08, you know, especially
for the assisted living and what not, people couldn’t sell their homes, right? The value of their homes left. So then it became an issue of maybe it’s cheaper
to stay at home and get 24-hour care. An interesting part about the home health
industry we’re seeing is the Uberization. So, you know, technology is starting to come
into healthcare. When I say by that is we’re seeing companies
out there that are offering basically you can go on app and say, “Hey, I need care for
my mother, right, who just I need to go away for four hours.” I can Uber app that. Lot of exposure there, but it’s something
that’s coming to the industry and changing it a little bit. Well, the challenges in the space are, how
do you compete against 40, right, 40 companies? And the way we do it at Cap is we really look
at it and say, “What’s our distribution strategy? What people do we have? What’s our product? And then, do we execute on all that?” This business is all about first three quotes
in win, right? So if you think about that, there’s 40 quotes
out there. If you get your quote in a week later, I mean,
these quotes have to be in in 10 minutes, 15 minutes, half an hour. I mean, that’s how quick this pace of this
business is. So it’s an exciting place to be, but you have
to have all that set up to succeed. I used to talk about this back in ’04 when
I started at another company. We could write a surgery center for 40,000. Today that surgery center is 10,000. So it’s not a shrinking of the pool necessarily,
it’s a shrinking of the premium. Now we were making money so there’s some sense
that that charge could come down, but the premiums are a lot less. So if you look at this space, we used to predict
there was an 800 million to a billion dollar industry, you know, in the core of the miscellaneous
med facility. It may be 500 or 600 million today that people
are competing. So there’s definitely premium going out the
door. I see the challenges being the profitability. I think just like the previous presentation,
they talked about the creep in the combined ratio. I think we’re fooling ourselves if we don’t
think the loss ratio pressure is gonna be there. The expense side is not going away, right? It’s expensive to deliver this. You need the people. So I think over time, the question is, how
many can survive this combined ratio creep, right? If this stuff gets up over 100, 105, is the
capital gonna be there? A lot of money came into the med mal. A lot of CEOs and insurance companies said,
“Let’s put our capital there.” Well, eventually, when the return’s not there,
you know, are these teams gonna fade away?

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