Let’s talk about how often you should be shopping around for medical malpractice insurance – and why it’s important that you do. Shopping can be a grueling process; there are so many different types of policies, and unless you understand the industry, there’s a lot of confusing language that can make it difficult to choose an option that best fits your practice. Many providers buy a policy based on price without totally understanding their coverage, then put their insurance on the back burner and let their coverage automatically renew. Let’s look at the top important reasons to shop for malpractice insurance.
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State of the market
The insurance market - especially in healthcare – is currently in what is called a "hard" market. This means that premium rates over the last 15 years have remained consistently high. A hard market is most often caused by insurance carriers paying significant claims while not collecting enough premium dollars to offset them. They then pass those losses on to their customers in the form of higher premiums. In addition, hard markets see carriers imposing stricter underwriting standards, asking more questions issuing fewer policies, and – at times – non-renewing physicians with excessive claims.
All of these factors have caused many insurance carriers to step out of the healthcare space as a whole, or become very strict with their appetite in terms of what they are willing to cover. Some carriers have even gone insolvent. Physicians and practices with significant claims in their recent (10-year) history may find themselves unable to purchase coverage in the standard market, and will need to turn to the excess and surplus markets for assistance. Meanwhile, for practitioners who seek alternative streams of income to help offset rising expenses (like opening Med Spas in their offices or offering procedures that are cutting edge or trendy), tightening underwriting guidelines often prevent coverage for these ventures on the standard policy, requiring these insureds to purchase separate policies from the excess and surplus market or to abandon these ventures altogether.
Changes in Exposure
It is not uncommon for a practice to change direction, add or remove services, or hire additional physicians in the first few years of opening. The coverage in place from when you first apply may not be adequate for the future and it’s important to re-assess and make sure everything is covered and that you’re fairly rated given your exposures.
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Holding the insurance carriers accountable
Most physicians and practices are eligible for credits and discounts that carriers are not applying if your broker is not aware of them. Your broker should be working on your behalf to get you the best coverage and pricing, looking out for all eligible discounts. If you already have coverage in place and you are shopping around for malpractice insurance, it doesn’t hurt to let your current carrier know so that they may find discretionary credits to keep your business. Many carriers use auto-renewal programs. So, if there isn’t any reason to review the policy, it will automatically renew with the same terms. While this makes it easy for both the carrier and the insured, it also means no one is actively looking at your policy and applying new discounts.
We suggest shopping for malpractice insurance every 3 years. Do your homework to find an agent that specializes in medical malpractice, has experience and knowledge in your state/region, and has access to the best carriers available. You should be able to trust your agent to represent you well, understand your coverage needs, provide ongoing support, and help you find the insurance carrier that is the best fit for you – while also ensuring that you’re not overpaying. Your agent should then bring you quotes from competing carriers to review and determine if your current policy fits your needs – or if you want to make a switch.
While it’s important that you shop regularly, do not take advantage. There are some downfalls when it comes to marketing that need to be considered:
1. You need to be aware that shopping too often and hopping from carrier to carrier can cause issues. Malpractice carriers keep a record of submissions – meaning, they keep track of how often doctors reach out to them to request quotes. If an underwriter sees that you’ve asked for a quote every single year for the past 5 years, they aren’t going to take you very seriously. It’s like the boy who cried wolf... they don’t know if you have genuine interest in working with them if you’re a constant shopper. The result of this is that you may not get the best possible rate, or the carrier may eventually choose not to offer you any more quotes. Similarly, if you hop from carrier to carrier every year, it’s going to look bad to the market and you’ll have a harder time finding a carrier that wants to work with you because you’ve commoditized your malpractice insurance.