When an insurer won't renew your policy
Q: My insurer is getting out of the malpractice business and won't be renewing physician policies. Any tips on how to find a new carrier? I have claims-made insurance. What about tail coverage?
A: Unfortunately, you have plenty of company. There's been a big shakeup in the malpractice insurance marketplace and several large carriers are leaving the business. Others have gone into receivership. Many physicians around the country will have to find new insurers at a time when premiums are the highest they've been in years.
Finding a new insurer may not be easy, though. Some of the remaining companies are at capacity and aren't writing new policies. Others are getting tougher on underwriting standards and will probably cancel or decline to renew some policies, especially for physicians with a significant claims history or those who practice in high-risk specialties. A handful of states have joint underwriting associations that must insure a doctor with a valid license, but the price is very steep.
To find a reputable company, consult an insurance agent who knows your marketplace. Check with the state insurance department. Is the carrier licensed in your state? That will be a clue to the solidity of the company.
Ask if a state insurance fund is available in case the company runs into financial difficulty. Check with A.M. Best, Standard & Poors, or other insurance analysts for an evaluation of the company's strength.
Never look simply for the cheapest policy available. You get what you pay for. If promised premiums seem too good to be true, they probably are.
A tail policy can be provided by your current insurer for alleged acts of negligence that may have occurred during the policy period but haven't yet been filed in court. Under normal circumstances, many insurers provide free tail coverage if a doctor has been with the company for at least five years. A company that's leaving the medmal business may still offer tail coverage, but it's likely to be expensive, often as much as two years' regular premiums.
Ask your current carrier if it's writing tail policies. You might be able to negotiate a lower premium if you agree to limit the coverage period to report claims to a few years rather than the usual indefinite period. If your current company is in serious financial trouble, buying a tail policy from it is risky, though. You'd essentially be bare if the company isn't able to pay the claim a few years down the road. A plaintiff could then go after your personal assets.
When you seek out a new insurer, ask about "nose" or "prior acts" coverage. That's essentially the same thing as tail coverage but it's provided by the new company for any claims that might be reported for your previous care while you were insured by the other carrier. As with tail coverage, it's likely to be expensive if the company is willing to offer it at all.
The author, who can be contacted at 2402 Regent Drive, Mount Kisco, NY 10549, or at firstname.lastname@example.org, is a health care attorney who specializes in risk management issues. This department answers common professional-liability questions. It isn't intended to provide specific legal advice. If you have a question, please submit it to Malpractice Consult, Medical Economics magazine, 5 Paragon Drive, Montvale, NJ 07645-1742. You may also fax your question to 201-722-2688 or send it via e-mail to email@example.com.
Lee Johnson. Malpractice Consult. Medical Economics 2002;7:148.