With medical malpractice insurance premiums on the rise for the seventh year in a row—a trend that hasn’t been seen since the early 2000s—there is no time like the present to ensure that you are getting the best possible rate and the most appropriate coverage for your practice.
No one is declaring a hard market, but some states are experiencing hard-market conditions where premiums are rising at higher levels and physicians have fewer insurers to choose from.
“This is relatively new ground for a lot of us here in recent years,” said Mike Hegwood during a recent webinar exploring important considerations for physicians when renewing their medical malpractice insurance coverage.
“It’s interesting that with lawsuits at historic lows, the risk still remains and the premiums continue to increase with many people saying there’s not relief in sight in the immediate future,” said Hegwood, who is assistant vice president of brokerage marketing for AMA Insurance Agency Inc., an AMA subsidiary.
He said that the current medical malpractice climate is an important backdrop for physicians to understand as they consider their next insurance renewal. During the webinar, experts offered advice for all physicians— whether they are in a hard market or not— to consider as they renew policies.
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When should I start thinking about renewal?
Three to four months before their renewal date.
That lead time helps ensure physicians have plenty of time to make informed decisions, said Chris Albano, national account manager at AMA Insurance.
“The more time that we are given, then the more quotes and more options we could give you. We could look through your coverage to make sure everything is in place and good,” he said. “We’re just able to give a much better overall analysis of the coverage and what would be the best situation.”
If a physician waits too long to start the process, it can lead to problems, said Phil Seroczynski, a physician insurance specialist at AMA Insurance.
In addition to creating stress for a not-one-size-fits-all process, he said carriers may need a carrier loss run that goes back five or 10 years, rather than just a National Practitioner Data Bank report.
“God help you if some carrier is saying, ‘Sorry, we have a seven-day wait on those’ and your grace period runs out in five days. Does that mean you’re not going to have coverage? Not always—not necessarily. But you might not end up with the best option you could have had,” Seroczynski said.
What will I need?
An insurance broker will need a policy’s effective date and most likely a copy of the physician’s current policy or at least the declarations page that is usually at the beginning of the policy.
“Most carriers will want an updated application. We can use something from previously as a jumping off point, but most likely we’re going to need a new application. It will give us a broader perspective on what we’re looking for in terms of your risk,” said Robin Trenchard, an insurance specialist affiliated with AMA Insurance Agency Inc. “The more the better.”
What questions should I ask?
Physicians should begin with the question: Does the medical malpractice coverage I have make sense right now, or can I get something better?
Physicians need to consider what may have changed over time at their practice and whether it may impact their coverage. In some cases, it could be detrimental to not tell the current carrier or new carrier about something that was added.
“You don’t want any conflict later on or arguments about what was really covered and what wasn’t,” Seroczynski said. “Secondly, don’t sell yourself short. What if you did cut down on some hours? There are certain watermarks and it’s not always a one size fits all with these carriers about where part-time starts and full-time starts.”
He said physicians often don’t ask those questions enough, and he emphasized that asking is not the headache physicians fear it might be.
“The reality is we do the work for you,” Seroczynski said.
What product features should I look for?
Adequate limits. Limits vary by specialty and by state, so an answer to the best limit to have will depend on where a physician is working. But Albano said the $1 million/$3 million limit is a good start. This means the insurance company pays up to $1 million for any single claim and up to $3 million for all combined claims during a single policy year.
“Doctors who are doing surgery and invasive procedures would be using $1 million/$3 million just as a starting point and possibly go higher just because some of the counties and states that they’re in are so litigious even if doctors do everything correctly and the standard of care is good,” Albano said.
Defense costs outside the limits. “A lot of carriers will try to put them inside the $1 million/$3 million limits that you’re given,” Albano said. “If you are brought into a claim, that $1 million/$3 million limit starts to get eaten right away as soon as the defense fees start to pile up. It’s an important thing that gets overlooked a lot.”
A consent to settle clause. AMA Insurance only works with carriers that need to obtain the physician’s consent to settle a claim before a settlement is made, giving physicians control over what happens.
Good risk management and claim support. “In the event of a crisis, you want to have the best service and the best people there to help you,” Albano said. It’s important, he said, to have “a carrier who has a dedicated claims team that’s proven that uses attorneys that specialize in the medical malpractice space.”
Good financial reputation. Look for a company with at least an A-minus rating from A.M. Best Co. Inc. In addition, you can look for carriers with an adequate surplus, stable financials, longevity and a reputation for fair claims handling. You might also consider reviewing the insurer’s annual report for more information.
Tail coverage. This is critical when you cancel the policy, as it ensures that you are covered if a patient later files a lawsuit for an incident that occurred while you were insured by a particular carrier.
Physicians should ask what the cost will look like because the cost of tail coverage is typically two to three times the cost of the policy premium at the time that policy cancels.
“We get calls a lot of the time that a physician is leaving a job and they didn’t realize that the tail was going to be this much or they had to pay and it’s like they get blindsided by it,” Albano said.
In response to the growing need for comprehensive, cost-effective medical malpractice insurance coverage, AMA Insurance has forged relationships with top-rated national insurance carriers to offer physicians robust coverage choices.
Their team of knowledgeable insurance specialists have more than 60 years of combined experience in medical malpractice insurance. They are noncommissioned, salaried employees and have no sales quotas to meet. And with the recent rate increases for this coverage, it’s recommended that you shop your plan annually through a trusted source such as AMA Insurance.
