Deductibles: Savings may only be short-term

Practice Management. By Mike Norbut, AMNews staff. July 28, 2003.

There is a way physicians can take it upon themselves to lower their liability insurance premiums -- if they're willing to take what can be a significant risk.

Medical liability insurance companies offer plans with deductibles, which essentially spread the risk between the insurer and the physician or group. Taking on a deductible will reduce a premium, but the amount would vary according to the doctor's specialty, policy and size of deductible, insurance experts said.

A deductible could save a physician "thousands," said Frank O'Neil, a spokesman for ProAssurance Inc., a Birmingham, Ala.-based insurance holding company whose subsidiaries are licensed to sell liability insurance in 45 states.

"As premiums have gone up, physicians have become more attuned to the little things they can do to reduce premiums," O'Neil said. "A deductible is something we welcome because it does get the physician involved in the process."

A theory among insurers is if a physician takes on some of the risk, he or she may be more cautious and less likely to draw a claim. The reduced premium is the physician's reward for the willingness to pay the deductible. Deductibles typically range from $10,000 to $25,000, while a few have been known to be as large as $100,000 -- if a claim is filed.

For a physician who has never faced a claim, or a large group that easily can absorb the potential cost of paying a deductible, the idea may have merit. However, there are some real limitations for most doctors, said Richard E. Anderson, MD, chair of The Doctors Company, which is based in Napa, Calif., and sells medical liability insurance nationwide.