The importance of implementing proactive strategies to mitigate risks and reduce premium impacts.
As medical malpractice rates rise, specialized surgeons are increasingly affected. Due to the inherently high-risk nature of surgical procedures, surgeons face a higher volume of malpractice claims compared to lower-risk medical service providers. This surge in claims results in increased payouts, leading insurance carriers to raise premiums significantly - even for surgeons with zero history of claims.
As an experienced medical malpractice insurance broker, I continually observe the effects of the growing frequency of substantial payouts and escalating legal defense fees paid by carriers for the defense of surgeons. However, there are options available. In this article, we'll explore how to select the right insurance carrier and emphasize the importance of implementing proactive strategies to mitigate risks and reduce premium impacts.
What makes a surgeon’s liability premiums so high?
Specialties categorized as high-risk experienced the most significant liability premium hikes. Orthopedics, neurosurgery, obstetrics, bariatrics, and general surgery are the frontrunners in 2024. Given the regularity and intricacy of their duties, these surgeons are more prone to litigation, thus posing a greater strain on insurance carriers' finances. For instance, data on neurosurgical malpractice underscores the intense relationship between specialty surgeons and insurers.
According to the Journal of Neurosurgery, nearly 81% of neurosurgeons have been sued at least once, 12.3% have been sued more than ten times, and 15% reported involvement in a lawsuit that awarded at least $1 million in damages to the plaintiff. These probabilities, compounded by the increasingly commonplace occurrence of socially inflated verdicts, prompt insurers to raise premiums to prevent insolvency.
Claim severity and legal fees significantly impact insurance rates
As claim severity continues to escalate and record-high verdicts become more widespread, insurers are growing more concerned. Record payouts influence premium rates by establishing a precedent for future claims. For instance, a family in Kansas City was awarded $25 million after a jury found that an OB-GYN and hospital failed to properly handle a delivery that resulted in brain damage for the infant. While not all claims result in significant payouts, even a small subset can impact premium costs by setting legal precedents and altering negotiation strategies for future cases.
Even if a malpractice claim is dropped or settled, malpractice insurance lawsuits generate major legal expenses. The 2024 Report on the State of the US Legal Market, published by Georgetown Law and the Thomson Reuters Institute, asserts that law firm rates have been steadily increasing for over a decade, with a particularly sharp rise of over 6% in 2023. Although insured surgeons aren’t directly responsible for paying most legal fees, they still face repercussions downstream.
If my client gets sued twice but can prove that no standards of care were breached then the plaintiff does not receive an indemnity payment from the insurance carrier. However, the entire process of refuting those claims is costly – often six figures in legal defense fees, paid for by the insurance carrier. As a result, my client is now vulnerable to a rate increase to offset those losses.
Best strategies to minimize liability premiums
1. Proactively prevent claims
Medical malpractice insurance rates take into account a physician’s previous claims history, regardless of their field specialization. While a surgeon with a clean record isn’t immune to rate hikes, they’re less affected than those with a history of claims. The single most effective way to minimize your premium increase is to maintain or strive for a claims-free record.
2. Document safety and quality improvements
3. Optimize staff and services
4. Know your options before you select a carrier
In conclusion
Implementing these measures can present you and your practice as a lower-risk client to insurers –yielding potentially more-favorable premiums and preferred coverage terms. Demonstrating the steps taken to reduce risk aids in reducing premiums across all surgical specialties. Alongside thorough research, prioritizing claim prevention is the most effective response to present or future trends. Regardless of your claims history, you can take proactive measures to reduce your future costs for liability premiums.
Max Schloemann is CEO of MEDPLI Insurance Services.
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