LaCroix and PLUS to Explore Challenges, Opportunities

The Professional Liability Underwriting Society (PLUS) International Conference, to be held in Philadelphia Nov. 9 – 11, promises to explore the often conflicting circumstances in the professional liability insurance industry. As such, the theme of the conference, Challenges and Opportunities, is designed to address the forces of transition and change that characterize the current state of the professional liability environment.

Kevin LaCroix, the president-elect of PLUS, is no stranger to those forces of transition and change. A lawyer by training, he has been involved in the professional liability industry for over 20 years. He joined Genesis, one of the Berkshire Hathaway group of companies, in 1995. Currently he serves as president of Genesis Professional Liability Underwriters in Beachwood, Ohio, a position he has held since 1997. Prior to joining Genesis, LaCroix was a partner in the Washington, D.C. law firm of Ross, Dixon & Bell LLP.

A frequent speaker and author on directors’ and officers’ liability and securities litigation issues, LaCroix is also the editor and a contributing author of the Securities Litigation Loss Prevention Guide. The Guide provides practical guidance as well as sample policies and procedures for companies to adopt in order to reduce their risk of securities litigation.

La Croix said he “became involved in PLUS about the same way everyone else does, by attending PLUS Conferences. I subsequently had the opportunity to speak to many different PLUS Conferences and to moderate several panels at PLUS Conferences.” He was elected to the PLUS Board in 1999 and has served on the Board since that time. During 2002 LaCroix served as secretary-treasurer of the association and as president-elect in 2003. He is chair of this year’s International Conference in Philadelphia.

In the following e-mail interview LaCroix discusses the upcoming PLUS conference, his plans for his term as president of the organization and the state of the professional liability insurance industry.

Insurance Journal: What role does PLUS play in the professional development of those involved in the professional liability field?
Kevin LaCroix: PLUS plays a very important role in the professional liability industry. First and foremost, it provides the highest quality educational offerings, in its symposia and conferences, and through the RPLU program. Second, it provides, through the Conferences and Symposia, a neutral ground for various industry players to meet, confer, do business and just get to know each other. This has had an enormous positive impact on the level of professionalism in the industry.

IJ: What, if anything, do you think the organization can do better in terms of serving its membership?
KL: In general, I give PLUS high marks for the quality of the services and opportunities that it offers its members. I think PLUS can do an even better job providing a unified suite of educational services and offerings, and I think it can do an even better job than it already does communicating with its members.

IJ: How can attendees get the most out of the PLUS International Conference?
KL: There are going to be some great panels at this year’s PLUS conference as well as some terrific special guest speakers. I think the high point will be the Industry Leaders Panel on Monday morning. The panel includes some of the most important players in the insurance industry and we are very fortunate to have them speaking to our conference.

IJ: What are your goals for your term as PLUS president?
KL: As PLUS president, I hope to build on the very fine work of my predecessors. The great news is that PLUS is a very strong organization right now. We have a strong membership base, a great staff, and a lot of services and offerings that get better every year. My highest priority is to make the educational offerings even better than they are now. We are going to try some additional conferences and conference locations, and we are going to make other efforts to improve the educational offerings. We are also going to take a look at the way we communicate with members. Finally, I would like to start some initiatives to get even more individuals involved in PLUS.

IJ: How would you characterize the current environment in the professional liability insurance industry?
KL: Right now, the professional liability industry is in a transitional state. There has been a series of shocks across the professional liability insurance industry over the last few years, all of which were exacerbated by developments outside the professional liability industry (for example, the tragic events of Sept. 11, 2001). In the recent past, all of these forces combined to create a turbulent market environment. The passage of time, the arrival of new capital, and other factors are combining to mitigate the turbulence. While it is unclear how all of this will affect the marketplace in 2004, the one thing about which I think we can all be sure is that it will be interesting.

IJ: Corporate governance and D&O issues have dominated the professional liability field over the past couple of years. What effect, if any, has the Sarbanes-Oxley Act had on D&O insurance?
KL: The conclusion one reaches about the likely impact of Sarbanes-Oxley on the D&O arena depends on whether one is an optimist or a pessimist. Optimists will conclude that Sarbanes-Oxley’s procedural requirements will improve corporate functioning and financial reporting and reduce the number of occasions in which companies engage in problematic behavior. The pessimist will conclude that the whistle-blowing provisions and other aspects of the Act will simply bring more fraud to light, and there will be an increase in claims. Only time will tell.

IJ: In your view, what are some other major professional liability issues that agents, brokers and underwriters need to be aware of today?
KL: I think the great overlooked issue in the professional liability insurance industry is the financial stability of the carrier. After all of the failures and withdrawals we have had in the past, you would expect this issue to be much more prominent than it is. Moody’s recently published an excellent study looking at the problem of reinsurance recoverables for insurance companies, and how the deterioration of the quality of reinsurance recoverables is undermining the financial reliability of insurance companies themselves. This is a very serious problem in our industry, but few seem to be focusing on it.

IJ: Are there any professions that are having more problems than others when it comes to securing professional liability insurance? What insurance issues plague those professions?
KL: I think all of the professions have been through a period in the recent past where they saw their premium escalate and coverage shrink. The profession that has seen the most significant problems in this regard is the medical professional industry. Social inflation and medical cost inflation have conspired to dramatically escalate the severity exposure in this area. Legislative responses will be required to control these forces.

IJ: What do agents and brokers need to know or do to make sure their accounts’ professional liability insurance needs are fully addressed?
KL: The single most important step that agents and brokers could do to ensure that their clients’ risks are fully addressed is to make certain that their clients fully understand the importance of insurer financial stability in the insurance purchasing decision. An insurance policy isn’t worth much if there is no insurance company when the time comes to pay the claim. For many professionals, the balance sheet of their insurer could wind up being the only thing that protects the financial fruits of their life’s work from total ruin. The importance of this issue cannot be overstated.

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