The product will not protect health plans against terrorism, the most obvious source of big multiple occurrence claims. But the product will protect health plans against births of triplets, epidemics, night club fires, car wrecks that hurt several members of the same family, and many other events that affect 3 or more insureds.

Health plans that buy the coverage and suffer multiple losses still have to pay a deductible, but they should get back more than they would collect if they had to pay 3 or more separate, conventional reinsurance deductibles or rely entirely on standard aggregate coverage, according to Michelle Fallahi, a vice president in ING Res Minneapolis office. ING Re is selling the product as a separate agreement along with conventional reinsurance.

When pricing the product, “we spent a fair amount of time looking at data for multiple births,” Fallahi says.

Quantifying the likelihood that other types of disasters will occur is more difficult, but ING Re actuaries see evidence that the incidence is increasing, Fallahi says.

ING Re excluded coverage for the results of terrorism to keep costs down.

Employers that are interested in the multiple-occurrence product should work closely with benefits advisors to see how the coverage would fit with standard aggregate coverage, says Stephen George, president of Provider Risk Inc., Miami, a reinsurance brokerage.

George also recommends that employers review their history of multiple-occurrence claims.

Fortunately, at most plans, “it is very rare to get the catastrophic hit, and tremendously rarer to get multiple-trauma, same-membership hits,” George says.

Reproduced from National Underwriter Edition, April 19, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.