Medical excess reinsurance is an ideal tool to protect the financial stability of insurance providers, which are not licensed HMOs, by limiting the loss in a year from any one claim that exceeds an annual excess deductible. (This essentially matches the reinsurer’s liability to the claim liability of the company.) This is different from typical HMO excess reinsurance which may not cover all claims on an individual, just those that are within the coverage limits of the reinsurance treaty.
Considerations When Purchasing Medical Excess Insurance
- Will coverage be for occasional catastrophic claims or for frequent large claims?
- Will risk be fully transferred on a non-participating basis, or will the carrier retain a portion of the risk?
- Does coverage apply for claims over a 12-month period or those attached during a 12-month period?
- Do any deductibles impact the reinsurance layer?
- Are the costs for claims management shared?
- How is the reinsurer involved with claim disputes with the carrier’s policyholders?