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claims-made policy covers only losses from occurrences within the
policy period that are reported during the period, as opposed to
an occurrence-basis policy, which covers losses whenever
reported. Other things being equal, premiums on an occurrence
basis are generally greater than premiums under a claims-made
policy form.
Parthenon retained the Wyatt Co. (Wyatt), an international
actuarial and insurance consulting firm, to recommend the initial
premium amount to be charged by Parthenon to petitioners. The
recommended premium amount for policy year 1977 was $4,500,000.
That amount compared to a quotation of $5,232,000 from
Continental for a policy providing the same limits to the same
insureds but on an occurrence basis.
During a portion of its first year of existence, Parthenon's
day-to-day operations were managed by Frank B. Hall and Company
of Colorado, an independent consulting firm. Senior HCA
management, however, decided that Parthenon should be operated by
its own employed management and staff, based in part on a
recommendation of an insurance industry consultant to the effect
that a properly staffed and operated company could produce a
savings for petitioners of more than $1 million per year in
premiums.
Parthenon's first president was the late John A. Hill (Mr.
Hill), then the Chairman of HCA. Formerly, Mr. Hill had served
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