Although most physicians think of themselves as medical professionals first, they are also business owners. Owning a Private Insurance Company™ offers physician/business owners an efficient way to mitigate the risks inherent in patient care and running a business, while taking advantage of tax incentives and building financial resources to fund growth.
While medical practices have care-specific risks, such as medical malpractice, to manage, they are also subject to threats to business continuity. These threats to the business include the obvious ones, such as loss of a key partner, as well as hidden specialty risks, such as security breaches which compromise patient confidentiality and social media attacks which negatively affect reputation. It’s the threats associated with these hidden risks which, though infrequent in occurrence, can trigger devastating financial loss.
Large, recognized risks, such as medical malpractice, often take “top of mind” ranking when physicians consider their legal vulnerabilities, which means coverage against these risks is one of the first coverages physicians secure. However, when physicians overlook hidden risks, such as a cyberattack that compromises data security or negative affects reputation they are, by default, electing to self-insure. This default decision to self-insure can be catastrophic – for the physician, the practice and the business. In fairness, trying to secure commercial coverage against hidden risks frequently leads to a dead end. Either there is no commercial coverage available on the open market or it is exorbitantly expensive and out of reach financially.
Hidden risks can be the motivation for a physician to own a Private Insurance Company. Because the physician owner completely controls a Private Insurance Company, it can provide specialty coverage not available from traditional insurers – such as protection from data breaches and damage to reputation. In addition to indemnification, a Private Insurance Company also affords its physician owner an opportunity to reward effective risk management, while building a “war chest” for the future. Some physicians offer employees of the practice health care coverage through a Private Insurance Company as well.