E&0, should I or shouldn't I?

[Guest Don J. Smith]

I just want some opinions on what you would do. I am a TPA and a Broker I carry E&O insurance through my Broker/Dealer for the securities side, but I have no E&O for my TPA side. I am about to ghost (subcontract) my TPA business out (24 plans) but my clients will not be aware of this arrangement. I have never carried E&O for the TPA side. Part of me says to keep the two buisnesses separate and if I ever do have a claim to just kill the TPA company, because there really isn't that much income there, plus I should have some leverage with the fact that I am not doing the work. I know the client would sue me and I would have to sue the ghost. I am already spending maintenance money on Admin and Document software that I am reluctent to give up, just incase this ghost relationship doesnt work out.

In addition, I am a licensed insurance agent and I do not trust insurance companies, I have seen to many of them screw people on health claims and I wonder if the loopholes aren't so vast in these policies that one might be paying for nothing but air.

[Guest mo again]

I worked for a TPA who had to make two substantial ($65,000-$85,000 each) E&O claims within a fairly short period of time.

You have more to be concerned about than being sued. Failing to make good on a legitimate claim will destroy your reputation, and not just in the segment of the business in which it occurred. Word travels quickly. If you are not in a position to cover any claim on an uninsured basis, I would give serious consideration to obtaining coverage.

[jeanine]

What type of plans are you the TPA for, and who is the "ghost" you plan to subcontract out to?

[Guest LTurner]

I am in similar situation... however, I wish to find E&O and am having trouble finding a provider. Any suggestions or company names you could pass my way?

[Guest mo again]

Benefitslink has yellow pages for this: Click here

I can't recall who our insurer was when those claims were made. (We probably drove them into Chapter 11 anyway). I don't work for a TPA any more so don't have a current insurer to recommend.

[Bill Berke]

ASPA has two insuers that will issue E&O policies. You may want to contact them in Wash. D.C. As far as having a subcontractor do the admin, you may want to have a warranty in your agreement where the TPA ghost represents that the ghost will always maintain an E&O policy (and ask for proof of policy). At least you will be able to claim against it if something bad happens. Unless you know the TPA very well, I would get a written contract.