All physicians know malpractice insurance is a very important topic that can’t be taken lightly. Determining which type of coverage is best can be frustrating. Malpractice coverage is a significant expense so it is important to know how rates are determined, what policies are available and what to look for in an insurance carrier.
How are rates determined?
There are several factors that impact the rates for malpractice coverage including the physician’s specialty, claims history and geographic location.
Claims have decreased in the last decade which has led to a somewhat stabilized medical malpractice market. The common adage, “the higher the risk, the higher the premium,” is a true statement. Rates for a surgeon are generally twice the cost compared to an internal medicine or family practice physician.
A “distressed” physician who has previous claims will see an increase in premium with a possible deductible applied for each new claim.
Geography also plays a role in the rate. A physician who practices in Philadelphia has a higher likelihood of being sued versus a rural county of Pennsylvania. This is due to the fact that the claimant might have more personal resources to file a claim and access to lawyers willing to pursue legal action against the individual physician or group. In Pennsylvania, the most expensive counties for malpractice coverage are Philadelphia and Delaware County.
What types of policies exist?
There are two types of policies available to practicing physicians: occurrence and claims-made.
Claims-made is the most commonly used policy and is offered by all malpractice carriers. Claims-made policy coverage goes into effect when the claim is made. For example, if a lawsuit is filed in 2018, then the 2018 policy will cover the claim.
Occurrence policies are not offered by all malpractice carriers, but they offer individual physicians and groups a greater level of flexibility. For example, if it is 2018 and a suit is filed from a potential compensatory event that occurred in 2015, the 2015 occurrence policy would cover this claim.
Claims-made policies can be cheaper up-front, but require the purchase of “tail coverage” if the physician leaves before retirement which could cost anywhere between 150% – 200% of the current policy premium. Occurrence coverage is more expensive year to year, but gives the practice and its physician’s freedom to leave with coverage in place for possible claims that arise in the future.
In addition to considering what policy is best, it is also important to choose the right insurance carrier.
What to look for in an insurance carrier?
-Financial strength – the carrier needs to have a “war chest” of pooled premiums to draw from when a claim needs to be paid. Look for a company with an “A” rating which is awarded to companies at the top of the industry in terms of creditworthiness and financial strength.
-Strong legal defense – does the carrier have robust legal panels? How have they done at trial? Does the carrier have physicians on staff to help assist in your specialty?
-Will the carrier settle a claim without a physician’s consent?
-Do they offer relevant online content for CME credit?
Physicians pay a significant amount for malpractice premiums, the insurance carrier should provide educational resources and be well-equipped to defend their insured when necessary. This is an important decision with many factors to consider. A trusted resource, like the advisors at Univest Insurance, can help ensure you choose the coverage that is right for your unique situation. Contact us at 800-220-3077 to start a conversation about your needs.
Insurance products offered through Univest Insurance, Inc. are obligations of the issuing insurance companies, not obligations or deposits of or guaranteed by any bank and are not insured by the FDIC or any other agency of the United States.