What physicians must know when shopping for coverage
Physicians need to consider many factors when shopping for malpractice insurance, and while price is often the primary consideration, it is important to look deeper into the differences in coverage.
Diane Robben, JD, an attorney with Sandberg Phoenix’s medical malpractice group who advises independent physicians and their practices on buying insurance, argues that doctors are making a mistake if they focus only on price.
“There are many other differentiating factors that insurance companies compete on besides price,” she says. “Many insurance companies are offering value-add services such as risk analysis, policy review, online training and other services to compete and stand apart. Don’t be afraid to shop around.”
Bill Fleming, chief operating officer of The Doctors Company, a medical malpractice insurance company headquartered in Napa, California, says it’s important for physicians to review a company’s history to learn how aggressive the carrier is in fighting claims.
The Physician Insurers Association of America (PIAA) and actuarial firms publish aggregated claims information that can be used to benchmark insurer results to some extent. Many insurers also publish their own claims data, including trial results, dismissals and claims settled.
No matter which company physicians choose, experts advise four key steps before signing a contract.
1. Talk to colleagues
Daniel Cavanaugh, assistant vice president of membership development for malpractice insurer Cooperative of American Physicians Inc., says young physicians going into private practice generally search the internet for information and coverage options or ask a colleague for a carrier or broker recommendation. Both of these, he notes, are a good start. Meanwhile, mid-career and older physicians are often more familiar with the insurance market and will gravitate toward carriers that have been in the marketplace for many years
Older physicians are also more likely to seek coverage through an intermediary such as an insurance broker or financial adviser.
Robben advises physicians to pay attention to the laws for whatever jurisdiction they practice in. Talking to colleagues can help with this as well.
2. Check the insurer’s rating
Fleming says independent physicians should choose a carrier with an A.M. Best rating in the “A” range and be aware of the class size from I to XV, as the smaller the number, the smaller the company. Even with a rating in the “A” range, if the carrier is very small, a few large losses can have a devastating effect on its financial security.
“You’ll want a carrier with history and experience in your state and specialty,” he says. “Medical professional liability insurance has an industry reputation of producing more volatile results, so you’ll want an insurer that has weathered the cyclical conditions of this market.”
3. Remember, if it’s too good to be true …
Fleming also advises physicians to be wary of policies that offer numerous one-year discounts, because prices will almost always increase substantially and physicians will often be stuck paying more than what they were first led to believe.
Also, if a practice is multi-state or might become multi-state in the future, it’s important to choose a company that is licensed in the states where a physician might practice, including telemedicine visits.
Before finalizing a policy, a physician should read the entire document, including all addendums and exclusions and be proactive if there is something that is excluded that they thought was covered before it becomes an issue.
“Know the scope of what is not included in the coverage such as HIPAA liability or cyber insurance coverage,” Robben says. “Also pay attention to whether the policy provides coverage for defense of licensure board complaints, or governmental investigations. Having a trusted and experienced lawyer to guide you through those scary and complex proceedings can help ease your fears and anxiety, and knowing there is coverage for the expenses is important.”
A physician who does it the right way compares policies, including commercial carriers and risk retention groups, which are liability insurance companies owned by the people it insures. This will help physicians determine which offer the best protections and provide the ability to consent and/or select counsel of his/her choosing, says Christopher J. Kutner, JD, MBA, co-chair of Rivkin Radler LLP’s Health Services Practice Group.
4. Be upfront early
When buying malpractice insurance, Fleming says, be candid with the underwriter. The more accurate and comprehensive the application is, the better.
“It is best to deal with issues like prior claims, changes in practice locations, negative news or social media, at the beginning,” he says. “That way you have established that you are open and candid in your relationship with the carrier.”
Even if physicians are happy with their malpractice insurance, they shouldn’t ignore it. It should be evaluated yearly and kept up to date.
“Whenever you change in size, add or drop practitioners, or have a significant change in the scope of practice, you should evaluate your medical malpractice insurance needs,” Robben says. “At a minimum, I would recommend calendaring to review your malpractice insurance on an annual basis. You want to be sure there are no gaps in coverage and that you have coverage from term to term.”
Kutner adds that claims history should be reviewed each year and checked against the requirements for remaining on a managed care plan or affiliated with a healthcare facility such as a hospital.
“If there is no change in premium, reputation or financial wherewithal of your current carrier, it is better to build a relationship with a carrier than to shop your coverage each year,” Fleming says. “If you have a claim, you might want to anticipate the reaction of the incumbent company and be ready to respond if you’re concerned about being non-renewed or surcharged significantly.”
However, he says, if physicians in primary care alter services or reduce practice from full- to part-time, they should check with their carrier about possible coverage changes and if not satisfied with the answer, shop around.
In addition, insurance experts warn, new developments can affect the industry, such as telemedicine or cyber risk. Many insurers provide baseline coverage in their policies with the ability to increase limits in specific areas, but physicians should talk to their agents to ensure they have enough protection.
And don’t wait until the last minute to make a change. It’s important to leave enough time before the expiration of one term to be able to evaluate other options and test the market by meeting with other insurance agents to see if a different policy would better fit a practice.