The innovation and creativity allowed to financiers in the Bermuda marketplace has attracted a new captive insurance company which specialises in medical malpractice.

Healthcare rent-a-captive, Futuro Insurance Company Ltd is managed through Bermuda-based PowersCourt Management and capitalised at $1.25 million. The company is part of Physicians Reciprocal Insurers (PRI), one of the largest malpractice carriers in New York State.

The news is featured in an article in the newsletter Insurance Update.

The new company caters to hospitals and individual medical practioners who are looking for ways to lower their malpractice costs while taking advantage of the profits of their insurance programme.

"By establishing an alternative risk financing mechanism, we can now structure a programme with the potential to generate future dividends,'' said Jeanne Pores, senior vice-president, hospitals and special programmes.

Asked why Bermuda was chosen as the domicile for the new company, Ms Pores said: "We looked at other offshore domiciles, but found Bermuda's regulatory environment and strict standards appealing.

"We were also impressed with the quality and professionalism of the captive managers and the attorneys and appreciated the benefits of a closely-knit insurance community,'' she added.

"The breadth of reinsurance capacity on the Island is staggering and we hope to take advantage of that capacity.'' Ms Pores was also full of praise that she was able to meet with Bermuda regulators and discuss Futuro's business plan well before the company was established.

PRI has partnered with another Bermuda captive over the past five years, functioning as an issuing carrier, third party administrator and risk sharer.

Ms Pores said the company intended to stay within their areas of expertise - medical malpractice and general liability.

"Initially Futuro will write programmes on a no retained risk basis, but we are looking forward to establishing long term relationships with Bermuda-based carriers so that we have the capacity we need to grow,'' she said.

"When it comes to malpractice insurance, we see ourselves as a leader in this field.

"Establishing partnerships with the right clients, brokers and reinsurers is number one on our agenda,'' she added.

Initially Futuro's emphasis was on offering flexibility to their clients but according to Ms Pores, recent tightening in certain lines of malpractice coverage has resulted in an unexpected level of interest from brokers around the US.

PRI concedes it has been overwhelmed with submissions looking for capacity to write nursing homes as the major writers of this insurance have pulled back in light of heavy losses.

"We're not afraid to write nursing home business,'' said Ms Pores, "especially with those who are prepared to take some risk and agree to follow our risk management protocols.'' Ms Pores also revealed that PRI is currently in negotiations with two large groups of nursing homes looking for coverage in the $15-$30 million range and she said plans of the company are to approach the reinsurance market for support.