This week, several folks from WMHS and I are attending the annual meeting of the Western Maryland Insurance Company, our Captive based in the Cayman Islands that provides our liability insurance. When we were looking for a new liability insurance carrier in 2004, the most prominent carrier in Maryland had just left the state and there were limited options for coverage. It ended up that our premium for that year was $3.9 million to cover the health system and 15 physicians. We knew we had to find a more affordable alternative.
As a result, WMHS began pursuing an off-shore Captive similar to hundreds of US health systems with Captives in the Cayman Islands. The WMHS Captive was formed in 2005; and in the 8 years that we have been a part of the Captive, we have saved close to $10 million in insurance premiums that would have been paid to insurance companies year after year. Those retained earnings remain a part of the Captive, along with all other invested monies. None of this money is paid to anyone else and it directly benefits the Captive and WMHS. In addition, our Captive now covers the health system and nearly 60 providers. Can you imagine the cost on an annual basis that we would have been paying to an insurance company?
The Captive requires a meeting to occur on an annual basis outside of the US and it is scheduled a year in advance since it requires the attendance of many actuaries, auditors, attorneys and other service providers. Also, every two years, the Captive leadership is required to meet with the Cayman Monetary Authority. The Monetary Authority is similar to the insurance commissioner for a State. The expenses for the meetings in the Cayman Islands are covered by the Captive. The timing of this year’s annual meeting is unfortunate based on what has been happening recently. We would have changed the date of the meeting if we could but it was not possible. In fact, we have already scheduled the date for next year.
The bottom line is the Captive has been a godsend for WMHS as we strive to manage the rising costs of providing healthcare services.