Ohio Regulators Place State's Only Physician-Owned Health Insurer Into Liquidation

The Ohio Department of Insurance said it has placed into liquidation Physicians Assurance Corp., a physician-owned health insurance company that starting writing business last year.

The Franklin County Court of Common Pleas approved the liquidation request by the department, headed by Insurance Director Mary Jo Hudson. The department licensed TPAC, as it's known, to write health insurance on Feb. 1, 2008. The insurer covers about 350 groups, which include about 8,000 members in central Ohio, the department said.

Robert Denhard, a spokesman for the Ohio insurance department, said TPAC had fallen below the state's required minimum reserve of $2.5 million. As of June 30, 2009, the insurer's surplus was only $418,000, so it was "well below the required minimum amount of money" it needs to have, Denhard said. In the first six months of this year, TPAC's losses exceeded $2.4 million, he said.

It was the only physician-owned health insurance company in Ohio, Denhard said.

TPAC's insurance contracts remain in-force, provided premiums are paid, the department said. Under the court order, contracted providers must continue to provide authorized or covered services for the contract period.

According to an A.M. Best Special Report, "U.S. Life/Health ? 1976-2008 Impairment Review," seven life/health and annuity insurers became financially impaired in 2008 and three impairments had emerged by May, 2009. At least two of the financially impaired companies?life/annuity writers Standard Life Insurance Company of Indiana in 2008 and Shenandoah Life Insurance Co. in 2009?were related directly to the subprime crisis. Three more impairments were added to the list in 2007, bringing that year?s count to nine.

Most of the other companies were accident and health insurers whose reserves and capital were stressed by inadequate pricing, higher-than-expected claims and expenses and were weakened to the point of impairment by the current economic environment, according to the Special Report. To read the entire report, visit www.bestweek.com and search for special reports.