RRGs Reduce Malpractice Insurance Premiums Up to 50%

No one likes to pay their malpractice insurance premium. Not only are they expensive, but doctors feel like they have no option but to pay the market rates from “traditional” carriers.

What carrier do you have? Medical Protective, ProMutual, Medical Assurance, ProMutual, The Doctor’s Company, Princeton Insurance, PAPRI, ISMIE, OHIC, MAG, etc. The list goes on.

If you have one of the above named or any one of the other 75-plus companies I didn’t name, the chances are about 100% that you are paying far too much for your malpractice insurance premiums.

When you use a traditional carrier to purchase your medical malpractice insurance, you are buying it from an entity that is trying to make a profit on your business. How much profit? It depends on the company, but typically insurance companies want to generate a 20% to 30% profit.

What about buying insurance from a company that is not profit driven? What kind of entity would offer medical malpractice insurance and not try to make a profit for its shareholders? An entity known as a Risk Retention Group — a controlled insurance company that writes coverage only on its doctor members.

RRGs are created for the benefit of its members. The goal is the least possible cost for insurance, not maximum profit like traditional carriers who are trying to make money for public stockholders. When the goal is not profit, an RRG essentially is able to return the 20% to 30% profit a traditional carrier tries to earn back to its members in the form of lower premiums.

Most traditional insurance carriers do not offer doctors a deductible. This is because their profit is driven by the total premium charged. Because an RRG is not profit driven, it can design policies with deductibles of varying sizes that can decrease the cost of coverage by up to 50%.

Insurance companies are in the business to make a profitMember focused, not profit drivenDeductibles

: Let’s look at an orthopedic surgeon who pays $40,000 a year for $1 million/$3 million coverage. If this doctor simply went from a profit-driven traditional carrier to a good RRG, the cost of coverage should drop by approximately 20%. If the doctor added in a $50,000 deductible, the premium could drop by as much as 50%.

Example

By using an RRG, this example doctor at a minimum should be able to save $8,000 a year and up to a maximum of $20,000 a year.

You can ask your current malpractice insurance agent where to find a financially stable RRG. Although if he/she has not already approached you about using an RRG, I would submit to you that you need to find a new agent. Quality agents already know the RRGs in the market and bring them to their clients in an effort to save costs.

If you have not shopped your malpractice insurance with an RRG in the last 12 months, you are doing yourself a tremendous disservice. Wasting money for insurance coverage is something doctors might be able to afford, but why when it’s not necessary.

If your agent doesn’t know of the available RRGs in your market, please e-mail me at roccy@thewpi.org; and I’ll get you information I have on the available RRGs in your area of the country. I can also give you the name of one RRG that aggressively markets itself through insurance agents that is on my do-not use list.

This article was written by Roccy DeFrancesco, JD, author of

, and founder of The Wealth Preservation Institute. The

has recently been approved for up to 21 AMA PRA Category 1 CME Credits™ in a self-study format. If you would like to purchase the book so you can earn CME credits in the comfort of your home, e-mail

The Doctor's Wealth Preservation GuideDWPG

info@thewpi.org

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If that doesn’t get your attention, nothing will.Getting a quote