Actuaries for the University of New Mexico Hospital have told the state that they could be on the hook for $120M in claims after a likely Class Action suit has surfaced.

The suit brings up an often overlooked insurance issue – what is a “claim”.

Although the story says the UNM Hospital is self insured, most similar facilities have a large self insured retention with Excess Insurance above it. Policy language would determine whether the 101 claimants in the class action count as one claim or separate claims. The policy provisions deciding how a retention is applied is often called “batch” coverage.

If the system carried a $1M retention with excess insurance above, the most they would pay on single claim is $1M. However, if the policy counts each claimant as separate the system would be out $1M per claimant – potentially over $100M.

Many systems also carry an aggregate retention, limiting the maximum amount that can be paid out in one year. With the alleged malpractice happening over several years improper policy wording could allow different policies to respond to each of the claimants.

Contact Calculated Risk Advisors today to better understand how your policy will react in the event of a catastrophic event.