2004 Year in Review

Efforts in Partnership, Prevention and Protection

Partnership.
The core of Princeton’s mission is partnership. Our fundamental objective is the same as our policyholders’: to ensure that each patient in New Jersey receives outstanding patient care. New Jersey’s doctors and hospitals in the foreground, Princeton Insurance supporting them in the background... a business partnership that endures.

Renewal retention rates – A strong business partnership is evidenced by the desire to continue to do business together over time. New Jersey’s healthcare community has sent that signal, in the midst of a competitive marketplace, as Princeton retained the vast majority of its hospitals and individual policyholders during 2004.

Over 14,400 individual and institutional policyholders chose to renew their coverage with Princeton in 2004 - a renewal retention rate of just under 90%.

Streamlining agent relations - New for 2004, an online policy system was put in place in order to help agents serve clients better. In the past, approximately 600 policies were processed in triplicate through our forms printing engine each week. The new system reduces that print load by one-third, translating into major savings and better service for doctors and hospitals.

Supporting meaningful tort reform – As an active member of the Physician Insurers Association of America (PIAA) as well as the American Tort Reform Association (ATRA) in 2004, Princeton Insurance supports efforts to achieve meaningful tort reform. Owned and operated by doctors and hospitals, PIAA is the voice of medical liability insurers. It is an association whose members represent 775,000 healthcare providers worldwide and whose mission is to advocate on behalf of physicians, dentists, hospitals and other healthcare providers in the areas of legislation, education, risk management and research. ATRA, a broad-based, bipartisan coalition of more than 300 businesses and organizations that support liability reforms, was formed in order to end lawsuit abuse while bringing greater fairness to the civil justice system.

Prevention.

Equipping policyholders with tools to reduce risk and prevent loss has always been a key business objective for Princeton Insurance. Known for innovative hospital risk management programs and resources, we are now moving to set the standard for physician risk management tools and techniques.

Healthcare Risk Services – Princeton’s Loss Prevention, Risk Management and Risk Information Departments completely converted all underwriting surveys and report requests to an electronic transfer system in 2004. Now, Underwriting staff can request surveys and receive reports electronically – making operations faster, more accurate and more efficient.

Risk Information – Our Risk Information business unit implemented a Data Task Force in 2004 to optimize use of our nearly thirty years of loss and underwriting data, seeking ways to benefit internal and external users.

Risk Management – Three of the four major areas of focus in phase II of Princeton’s Institutional Policyholder Service Plan were completed in 2004. They include Staff Training Audits, Documentation/Credentialing Audits and Evaluating the Patient Experience. The final component, an Informed Consent module, is presently underway.

Loss Prevention – All survey forms, tools and reports used to provide information to strengthen policyholders' loss prevention efforts were revised and updated in 2004.

Protection.

The core of a medical malpractice policy is the company’s promise to defend you when a claim is made, and to pay others on your behalf when a medical error has occurred. Protection – it is the essence of the product we provide to you. The first line of defense for our policyholders is a well-staffed, expert Claims Department dedicated to policyholder protection. Beyond claims work, Princeton has stepped up efforts to grow surplus funds, reduce expenses and take other steps as needed in order to maintain financial strength over the long-term. As other companies have come and gone, our dual focus on claims expertise and financial strength makes for sound insurance protection.

Surplus growth – Unlike many products where their cost is known at the outset, the insurance policy’s cost is based on an estimate of what will happen in the future. How often claims will be made, how much will be spent in defense of those claims which are made years later, are all estimated at the time the policy is sold, based in large part on past history. However, new tort theories, changes in the legislative law, and inflation, including medical inflation, all combine to create some uncertainty as to the cost of providing this protection. Surplus is there to respond when those estimates prove wrong. Growing our surplus, and consequently strengthening the protection we provide you, has been a key goal for Princeton – one we achieved. In 2004, Princeton’s surplus grew 23% from $136 million to $167 million.

Increased exposure identification – Our Underwriting Department’s initiative to enhance exposure identification will benefit policyholders by accurately assessing increased or decreased exposure per specialty. This allows for more accurate and risk-specific pricing.

Reduced expenses – Princeton Insurance was very successful in lowering its expense ratio in 2004. Restructuring current programs and reassessing the value of various practices allowed us to execute smart expense control – something we plan to continue in 2005 and beyond.

Realignment of Claims Department–With a new internal structure and a refined relationship with defense counsel in place, Princeton’s Claims Department can now handle claims more efficiently and effectively.

Increased utilization of in-house case review – Recognizing the value and importance of
in-house physician medical reviews, the Claims Department increased the number of cases reviewed in 2004, brought up the number of specialties engaged in the process to 27 and increased the visibility of the function within the department.

In all of our efforts, whether related to partnership, protection or prevention, one thing is clear: Princeton Insurance exists to serve the New Jersey healthcare community, and our achievements in 2004 reflect that goal.