NJ PURE, the Princeton-based not-for-profit medical malpractice insurer, announced Monday a strategic alliance with a subsidiary of Liberty Mutual Insurance, which will become the exclusive reinsurer of NJ PURE's malpractice policies.
Eric S. Poe, chief litigation and marketing officer of NJ PURE, said Liberty International Underwriters will cover 50 percent of NJ PURE's malpractice claims and receive 50 percent of the premiums that physicians pay NJ PURE for malpractice coverage. In addition, Liberty International will pay a portion of NJ PURE's operating expenses, including its legal and litigation bills.
"Our policyholders now have the additional comfort of knowing that NJ PURE's policies are backed by Liberty Mutual, a financially strong, A-rated global insurer," Poe said.
Liberty International Underwriters will be the sole reinsurer of NJ PURE's malpractice policies, Poe said. Currently NJ PURE purchases reinsurance from a number of reinsurance firms, who pay the portion of a malpractice claim that exceeds $250,000 up to $1 million, but do not pick up any of NJ PURE's operating expenses.
Poe said the deal with Liberty International will be beneficial to NJ PURE, since 75 percent of the malpractice claims are less than $250,000.
"We look forward to working with NJ PURE and its high quality management team," said Carl Pursiano, senior vice president and chief underwriting officer of US Specialty Casualty for Liberty International.
Poe said NJ PURE provides malpractice insurance to 1,000 doctors in the state, or about 4 percent of doctors, who buy medical malpractice in New Jersey. He said the company collects about $16 million a year in premiums and has assets of $42 million.
Poe said this strategic alliance with Liberty Mutual will raise the profile of NJ PURE.
When the company competes against huge malpractice insurers "we need to let the physicians know we have the financial stability of an industry giant like Liberty Mutual behind us," he said.
NJ PURE only writes malpractice insurance in New Jersey and it does not distribute its products through agents and brokers. Poe said NJ PURE saves money by not paying brokers' commissions, but it also isn't getting the marketing support that insurance agents in the field provide.
He said the deal with Liberty Mutual "from a strategic perspective is a testament to physicians who want to know that NJ PURE has the financial solvency to ensure their future."
Boston-based Liberty Mutual Insurance ranks 81 on the 2012 Fortune 100 list of the largest U.S. corporations. At Dec. 31, 2012, it had $120.1 billion in assets and had $36.9 billion in revenue in 2012.
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