FAQS–AAOIC®, WHERE WE ARE
What has been the relationship between AAO and AAOIC®?
AAOIC, the market leader in providing professional liability insurance to orthodontists, and AAO are separate and distinct legal entities with separate boards of directors, officers, governance and operations. By agreement, in return for AAO’s designation of AAOIC as the sole endorsed carrier in the AAO endorsed insurance program for professional liability insurance for orthodontists, AAOIC has paid an annual royalty to the AAO and agreed to offer its insurance product only to AAO members.
What about the increase in insurance premiums in some areas?
From time to time, every insurance company performs a rate study to evaluate the premiums charged for the risk in a particular area. Premiums are set based on actuarial assessments of litigation risk in different areas. All insurers adjust premiums to reflect local risks and losses. AAOIC offers policies nationwide, stays competitive, even with occasional premium increases in some areas, and has consistently paid insureds an average 20% dividend for years.
What has exactly happened between AAO and AAOIC?
AAOIC has been the only AAO endorsed insurance company that AAO prohibited from selling insurance to non-AAO members. AAOIC observed the insurance market environment has changed considerably and requested AAO to accommodate AAOIC’s evolving business needs and permit AAOIC to serve orthodontists that are not AAO members. After over two years of negotiations to resolve the issues in a mutually acceptable way, the parties could not agree and therefore, AAOIC gave the required 60-day notice to terminate our royalty agreement with AAO while we continued to negotiate unsuccessfully.
How does this affect the continued operations of AAOIC?
First, be assured that AAOIC remains a very financially strong insurance carrier committed to continuing to be the leading carrier in orthodontic professional liability insurance. Our underwriting and claims practices are unchanged. All current policyholders who continue to meet our underwriting guidelines will be able to renew their coverage in a timely and efficient manner.
Second, AAOIC has changed our name to The Orthodontists Insurance Company™, a Risk Retention Group, subject to regulatory approval.
Third, we will continue to return profits to our policyholders, who are also our owners. In recent years, our policyholder dividends have averaged 20% of their base premium. Most of our competitors are publicly traded and either retain profits or pay them as dividends to their investors.
Fourth, we will remain a company “Created By Orthodontists for Orthodontists®”. Our Board of Directors continues to include a majority of practicing and retired AAO members supplemented by insurance, legal and financial professionals.
What do I have to do now as an AAOIC policyholder?
No action is required. Your rights and responsibilities as an AAOIC policyholder are unchanged. We want you to keep your policy in force with us as long as you continue to practice and meet our underwriting guidelines.
What will be the ongoing relationship between the AAO and AAOIC?
AAOIC currently has five AAO past presidents on its Board of Directors so we are, and will continue to be, very supportive of the AAO and its mission to continually advocate for and advance the practice of orthodontics. We will encourage our current and prospective policyholders to participate in the AAO to enable them to stay abreast of current developments in orthodontics and develop an exceptional network of professional peers.
AAO membership, while encouraged, is no longer required for our policyholders.
Will I receive other solicitations for professional liability insurance?
Given the changing relationship between AAOIC and AAO, other insurance brokers are likely to actively solicit your business. We aren’t afraid of competition, and we don’t discourage you from listening to their pitch but please do so with a bit of healthy skepticism. Remember that we only insure orthodontists and that your claim, in the unlikely and unfortunate event it happens, will be evaluated by a team of experienced orthodontists and only settled upon your agreement to do so. Also, please remember the policy dividend that you receive and inquire as to what dividend you can expect from the competing carrier. Lastly, you might ask the broker what percentage commission rate they would receive if they were to bind the coverage. No broker receives a direct commission based on AAOIC premiums paid by our current policyholders. We have been, are, and will continue to be “The Provider of Choice for Professional liability Insurance Coverage for Eligible Orthodontists”.