BUSINESS

Last chance for coverage: Liability crisis sends doctors scrambling for insurance

When other options dry up, doctors may find an oasis (albeit costly) in surplus lines insurance.

By Bob Cook, AMNews staff. Feb. 17, 2003.

More and more physician practices have something in common with rodeos: the source of their liability insurance.

As liability carriers get a burr under the saddle about the money they're losing, increasingly goring and throwing off supposedly high-risk physicians, doctors are left facing the wild frontier known as surplus lines insurance.

You may have never heard of surplus lines insurance -- until the last year or so, not many physicians had. Surplus lines, also referred to as excess lines or nonstandard coverage, is the market that will cover you when no state-licensed insurer will.

And increasingly, state-licensed insurers won't: In many states the number of carriers is declining. Remaining carriers will not write new business and will drop a physician with any claims history or who practices in a supposed high-risk specialty. Surplus lines guarantees that coverage is available.

"When the river overflows the dike, we're the catch basin, so to speak," said Letha Heaton, senior vice president for sales and marketing for Shand Morahan Co. Inc., a Deerfield, Ill.-based division of Markel Corp. offering surplus lines insurance.

There's no question that surplus lines insurers guarantee availability of coverage, but when it comes to affordability -- well, you can't have everything. Surplus lines insurers have to register with state insurance departments, but in exchange for their willingness to cover high-risk activities (such as rodeos) or write unusual policies (such as earthquake insurance), their rates and terms are not regulated.

[...]

Full text of AMNews content is available to AMA members and paid subscribers.

Access details

Join the AMA