Vermont court places medical professional liability insurer CARE RRG in rehabilitation

By Mia MacGregor

April 23 - (The Insurer) - Medical professional liability insurer CARE Risk Retention Group has been placed into rehabilitation by order of a Vermont Superior Court, which found the insurer to be in a “hazardous financial condition” and approved a plan requiring the termination of all in-force policies.

The Vermont Department of Financial Regulation stated that CARE’s liabilities exceed its assets, and it is uncertain whether the company will be able to fulfill its policy-level obligations in full.

Originally licensed as an association captive in Washington, D.C. in 2003, CARE RRG began operations in 2004. It redomesticated to Vermont in 2018 and was issued a new certificate of authority.

The company is owned by CARE Professional Liability Association, and provides medical professional liability insurance to over 1,300 insureds across 33 states, with business concentrated in California, Florida and New York. The majority of its insureds practice family medicine, with others including general surgeons and obstetricians, according to the petition for order of rehabilitation.

According to the petition, CARE RRG had $11.9 million of gross premiums written for 2024, down from $12.4 million in 2023, while it made a $1.6 million net loss last year compared with a loss of $1.5 million the year before.

CARE RRG had entered into several reinsurance arrangements over the years, including a 90% quota share reinsurance agreement with Fergus Re in 2021. This arrangement supplemented its excess of loss coverage with AmTrust.

The Fergus Re program was non-renewed effective October 31, 2024, but AmTrust agreed to accept the insured exposures reinsured by Fergus Re and included under its excess of loss reinsurance program, according to the petition.

In its order for rehabilitation, the court approved the proposed plan of rehabilitation and appointed Vermont's acting commissioner of the department of financial regulation Sandy Bigglestone as rehabilitator. The order directed that the rehabilitator implement that plan, while taking control of CARE’s assets, and managing its operations.

The order also places an immediate pause on all policy-level claim payments, including defense costs, indemnity, and return premiums.

Over the next 60 days, the DFR said that the rehabilitator will evaluate CARE’s financial condition and submit a report to the court, assessing the company's ability to meet its obligations and offering recommendations for next steps.

The rehabilitator is expected to propose a plan for the resumption of payments, potentially on a partial basis, but the timing and amounts remain uncertain, the DFR stated.

As part of the plan, a 90-day nationwide stay has been imposed on the initiation or continuation of litigation against CARE policyholders for claims that may be covered under its insurance policies.

The stay is part of a broader channeling injunction requiring all legal actions against CARE, its officers, directors or affiliates to be filed through the court.

This provision is intended to provide a structured transition of defense responsibilities from CARE to its insureds. The rehabilitator does not plan to extend the stay beyond the initial 90 days, according to the DFR.