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10 HARTFORDBUSINESS.COM | NOVEMBER 13, 2023 Business Strategy Stephen J. Gallant is the CEO of Glastonbury-based medical malpractice insurer Integris Group, which is nearly doubling in size through a pending acquisition. HBJ PHOTO | STEVE LASCHEVER With Florida acquisition, Glastonbury malpractice insurer Integris Group seeks growth in lower-cost markets By Andrew Larson alarson@hartfordbusiness.com A Glastonbury-based medical malpractice insurance company originally founded by a group of Connecticut doctors is set to close on an acquisition of a Florida insurer, a move that will allow it to enter a new market and nearly double in size. Integris Group — Connecticut's second-largest medical malpractice insurer that also sells policies in Massachusetts — recently agreed to acquire Jacksonville-based MedMal Direct Insurance Co. from Physicians Trust Inc. Financial terms of the deal, which is expected to close by the end of this year, weren't disclosed. The expansion will enable Integris Group to sell policies in southeastern states that tend to have lower coverage needs — and smaller malpractice payouts — than Connecticut, according to CEO Stephen J. Gallant. The geographic diversification is aimed at reducing costs in an ultra-competitive market, he said. The deal follows a four-year process that involved Integris Group changing its company structure from a mutual insurer to a mutual holding company, which allowed it to pursue an acquisition, Gallant said. "We changed our structure in 2020 to allow for a transaction like this to happen," Gallant said. "It made it much easier in terms of our setup." Integris, with $33 million in direct written premiums at the end of 2022, is slightly larger than MedMal, with $26 million in direct written premiums. Integris has agreed to keep all of MedMal's 35 employees, and will maintain the company's Jacksonville headquarters. The new employees will complement Integris' 35 workers, bringing the total number of staff to 70. Company structure Integris Group was formed in 1984, at a time when many insurance companies stopped underwriting medical malpractice coverage due to the high costs, Gallant said. Connecticut doctors who couldn't find insurance pooled their resources and formed their own insurance company, Integris, he explained. Integris primarily writes profes- sional liability insurance policies for small and large physician groups. It does not insure hospitals. Integris was a mutual insurance company, a nonprofit owned by its policyholders, until fall 2020, when the Connecticut Insurance Depart- ment approved its conversion to a mutual holding company. While many mutual insurers convert to mutual holding companies when they need investors to raise capital, in Integris' case, it wanted to grow outside its home state by acquiring or affiliating with another company. As a mutual insurer, it didn't have the ability to acquire a stock-owned company like MedMal, which sells medical malpractice insurance in Florida, Georgia and Texas. Combined, the companies will be licensed to transact business in 23 states and the District of Columbia. Industry challenges Medical malpractice insurance is a significant expense for physician groups in Connecticut, Gallant said. The Connecticut State Medical Society, a lobbying group for doctors, says the state's high health- care costs are driven, in part, by the litigious medical malpractice environment here. Malpractice insurers feel the pres- sure of high payouts, too, Gallant said. Connecticut's lack of a limit on damages in medical malpractice cases can contribute to large settle- ments in favor of plaintiffs, according to the medical society. Also, when economic damages are calculated for a plaintiff, the amounts tend to be higher in states like Connecticut, which have a high standard of living, Gallant said. That means doctors require more coverage in Connecticut. The typical policy Integris writes carries a $1 million minimum, he said. "Whereas, in other parts of the country, … the minimum and common coverage amount is $250,000," Gallant said. "So, we're four times their minimum. In a lot of cases, it's more like eight times." Escalating costs The average payout for a medical malpractice claim in Connecticut, including those that went to trial, was $918,666 between 2018 and 2022, according to data from the Connecticut Insurance Department. Total medical malpractice market written premiums increased from $157 million in 2015, to $253 million in 2021, the data shows. Direct losses paid have also been on the rise in Connecticut's medical malpractice market, totaling $138.4 million in 2015, to a high of $173.6 million in 2020, before dropping to $140.3 million in 2022. Integris' direct written premiums in Connecticut increased from $19.2 million in 2021, to $21.2 million in 2022. Its direct losses paid also increased, from $8.6 million in 2021 to $9.9 million in 2022, according to Connecticut Insurance Department data. The only medical malpractice insurer with a larger Connecticut market share than Integris is MCIC Vermont, which recorded $129.2 AT A GLANCE Integris Group Industry: Medical malpractice insurance Top Executive: Stephen J. Gallant, CEO HQ: 80 Glastonbury Blvd., Glastonbury Website: integrisgrp.com