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Thursday, August 07, 2008

Can't get affordable insurance? Start your own company.

Four years ago, an emergency medicine physician in south Florida was asked to pay liability premiums that represented greater than 1/3rd of his entire revenue and he could simply no longer afford it. Rather than flee the state, grin and bear it, or bitch and moan, this physician studied the issue and came up with a solution. He started his own insurance company. Fours years later EMPAC, the company founded by that physician, has become a very successful and profitable liability insurance company-RRG that underwrites emergency medicine physicians only.

2 years ago, a urologist, Ernie, in Nevada became fed up with double digit increases in his premiums that made it difficult for him to simply remain in business. Rather than flee the state for a more hospitable environment, he drove himself to the offices of the Nevada Department of Insurance and "ranted and raved." He wanted answers. He wanted solutions. A persistent individual, Ernie was not about to give up until he had a solution. Ultimately, an official in Nevada's insurance office gave him a name of someone in Florida who started an RRG for emergency physicians.

Ernie called him. And he called him again. And again. And again.

Over an 8 month period Ernie would not go away and he would not take no for an answer. After 8 months, Ernie had convinced this person in Florida to help him start a new company with him. The new company was to be called SCRUBS. Ernie's Florida contact was the founder of EMPAC; the man who started that company out of his own necessity.

Ernie and the EMPAC founder along with his EMPAC founding partner, personally risked $500,000 to fund the cash reserve requirement needed to obtain an insurance operating liscence in Nevada. They hired outside consultants to administer the plan and they flew around the country to meet with urologists and urology administrators and to promote the new product. In order to operate as an insurance company, SCRUBS would need at least one policy holder. Ernie risked once again and dropped his traditional policy to become SCRUBS first and only policy holder. The entire company, all 3 or them, prayed that Ernie would not get sued.

Both Ernie and SCRUBS survived that first year and looked to grow the company in 2008. The 3 managers of SCRUBS knew that New York's urologists were ripe for the taking and they concentrated promotional efforts on this group. SCRUBS' management obtained a list of practicing urologists in New York and elsewhere and sent a flier.

While the 3 SCRUBS managers worked on their problems, I had problems of my own and was facing the double digit increases in insurance premiums that most of my urology colleagues faced. At these 15% rates of increase--compounding of course--our premiums were to double every 3 years and would have crossed the $100,000 threshold by 2010. At the current rate, many of us had to work without a paycheck for 3 to 4 months just save enough for July's premium, its increase, and any additional surcharges that often accompanied them. By 2010, I'd be done without intervention from Albany or elswhere.

In February and March and I attended medical staff meetings and joined grassroots efforts to effect change at the capitol. I became an activist, I pleaded with Albany and begged "them", to not let us doctors go under.

But there is no "they", and what "they" there is does not care about "you"; well certainly not about me.

In mid-April 2008, I recieved a flier from a company called SCRUBS, an RRG that only underwites urologists. Fed up with "them" and "they" and and a future that in the absence of course-change, would lead to certain demise 4 to 5 years hence, I responded to the letter and sent in an application. Several weeks later my life changed, or at least my outlook changed. SCRUBS had answered me. SCRUBS had agreed to underwrite me at considerable savings now, stable premiums into the future, and the possibility of premium reductions as the company grew.

In July 2008, I joined Ernie and became SCRUBS second policy holder, and the first in New York. As of today, I am one of 45 urologists across the nation who decided to take a chance and change course; to take control of our destinies. Our future is still uncertain, only now it is hopeful.

Wish us look and good fortune.

The IU.