Insurers' flexibility can be a double-edged sword
by Bruce Cappon (continue)

• fewer new physicians entering the field
• shrinking incomes meaning less insurance is required
• more claims on the plan because of disabilities associated with work-related stress
• interest rates at a 30-year low, meaning fewer investment earnings on reserves
• keener competition from individual insurance plans
• in Ontario, marketing of alternative insurance packages by physician splinter groups coupled with a political climate that could alienate young physicians who are prospective new enrolees.

The fundamental difference between association group insurance and individual policies is the insurers' flexibility to change coverage already in place. With most association plans, the ability to amend the contract or change premium rates remains with the insurer, although this is sometimes done in consultation with association representatives. However, with an individual policy, the insurers do not have this option. If an individual policy insurer misjudges a risk and issues and ill-conceived string of policies, they can only correct their past sins by making up the difference on newly issued policies. However, if an association insurer sees the risk equation has changed, they have two options:

- risk the wrath of existing policyholders and amend the entire group plan; or

- freeze the existing plan and bring out a revised, less attractive plan for new enrolees.