Editor’s note: Most healthcare providers need medical malpractice insurance, which means that whether you run a start up, multi-location practice, or DSO, you’ve had to wade through a litany of offerings. We’ve referred our clients to several insurance providers over the years, prioritizing the brokerages that share our values – they’re responsive, deep experts in their field, and put clients’ interests first. If you’re searching for medical malpractice insurance, you can learn more at treloaronline.com.
If you operate a group or are part of a DSO, it’s common to shop for a new malpractice carrier periodically as the practice evolves. We thought we would put together some tips to consider as you evaluate a move to a new carrier. (Keep in mind, many of the points we make here will apply to folks shopping for individual professional liability policies.)
What should you be thinking about if you’re thinking about moving coverage to a new insurance carrier?
- Begin by assessing the strength of the insurer. Though this may appear obvious, you’d be surprised at how many people neglect to learn more about the company that offers the insurance. It’s easy to skip over this foundational step and quickly jump to comparing features, benefits, and price. Don’t be tempted to shortcut because you may be overlooking important details. You should be comparing insurance companies based on their size, their financial ratings, how long they have been in business and their history and success in representing the people they insure. In short, you want to select the coverage with the best value proposition, not necessarily the cheapest price. Larger companies that are financially sound may have more resources to fight claims. You want to select a company that wins way more cases than it loses. Many carriers publicly share information about the outcomes of cases brought against their insureds. If information is not available about the carrier’s percentage of claims closed without payment, trial win rate, or the win rate is not favorable, you may want to hit pause before moving forward. Bottom line: work with a winner!
- Look for the consent clause. The consent clause will explain your rights in the event a claim is brought against you. Can the company decide if a claim against you should be settled, or do you have the final say in the matter? Different consent clauses give the insurer different amounts of latitude in the determination of the outcome. What’s generally known as a “pure consent” clause means that the insurer will not settle a claim without the doctor’s written consent. Some companies may not have pure consent and if there is a disagreement about how to move forward may take a case to an arbitrator for a final decision. Yet again, there are other companies that may suggest a settlement amount. If you don’t agree to settle and decide to take the case to court and lose, you pay anything over the amount that they were willing to willing to settle for originally. Pure consent gives you the most control over the outcome, and pure consent is not a feature offered by every carrier. Read the fine print!
- Understand your policy types…and know that with groups things can get even more complicated. You may recall the two basic types of malpractice policies: “occurrence” and “claims made.” Occurrence policies protect the doctor for the duration of the policy, regardless of when the claim is made. Claims made policies only protect the doctor while the policy is in effect. If the claim is made after the policy is expired, the doctor is exposed to liability. This gap can be mitigated by purchasing what’s known as a ‘tail’ (additional insurance for the period outside of the coverage span.)Here’s where things get interesting. Let’s say there are six or seven doctors in the practice and they each bought their professional liability policies at different points in their careers (from different companies, etc.) Some may have occurrence policies, some bought claims made. If the group decides it wants to get everyone on the same track (which groups want to do, generally), then everyone needs to gravitate toward uniformed coverage. Decisions will need to be made on how to align these individual coverages. So, for example, if the practice as a group decides everyone should have occurrence policies, then those doctors who already had occurrence policies may stop paying on their existing policies, and just start paying for the new one. Their old occurrence policy would cover all their previous work to date, and their current and future work would be covered by the new occurrence policy. Let’s say a handful of the doctors had claims-made policies in this group. To align their policies with the new format (occurrence) there would be a need to make some decisions. They could drop their old claims-made policies and transition to a new occurrence policy, but this would mean that all their past work would not be covered by the new policy. It would be wise to purchase a ‘tail,’ for this subset of doctors from the current carrier. By the way, the technical term for this additional policy (‘tail’) is an “extended reporting endorsement.”
- It’s possible to initiate a new policy based on a retroactive start date. Just to offer a third way, it’s possible to get a new claims-made policy with a new carrier and to ask the carrier to cover them retroactively to some start date in the past, so that they are covered back to the beginning of their old claims made policy. The ability to initiate the coverage date back to the previous policies’ start date offers flexibility for groups looking to align a mix of occurrence and claims-made policies.
- What if some of the doctors don’t want to change their coverage? This is known to happen, and if this sounds like your group, then the group collectively would need to potentially make some difficult decisions. It’s not ideal. Concessions may need to be made. The good news is you have choices, there’s no single ‘right’ way to do this. A good advisor can work with you and the carrier to design a creative solution that works for your group.
- If the group purchases a tail for each doctor from their previous carrier, this can help avoid claims that may have resulted from treatment(s) prior to when the doctors joined the group. This is a perfect example of the flexibility that a new policy can afford the entire group. Say everyone in the group moves to an occurrence policy format, but some folks were coming in with claims-made policies. The group decides to buy separate tail coverage, providing protection for each doctor back to the start of their original claims-made policies. This way, a claim that didn’t occur within this group would be the responsibility of the carrier that they purchased the tail from (typically the previous provider) and potentially not impact the integrity of the block of coverage with the new carrier.
- Know your limits. Make sure you know the per-claim limits and your aggregate limits of coverage. Also, when you move a group of doctors to new policies, you should consider your exposure and investigate the costs of increasing coverage. Often coverage can be significantly increased and the increase in cost is substantially lower than the proportional increase in coverage. You will also want to address corporate or entity coverage. In the event of a malpractice lawsuit, your dental practice may be named and found liable for damages. Entity malpractice insurance may be one way of protecting your practice. Obtain an occurrence policy form and be aware that the individual policy limits for the doctors cannot exceed the corporate policy limit.
- Ask about the ease of doing business with the carrier. Is someone available to answer risk management questions as unforeseen situations develop? Can all the doctors’ policies be billed together for administrative ease? You’ll want to work with a carrier that is accessible and willing to work with you, a carrier that is responsive to your needs – whether it’s about defending you against a claim or streamlining your billing. Ask your financial advisor about their experience working with the carrier.
- Work with an experienced financial professional. Does the advisor have the resources to provide a concierge level of service and the sophistication to provide solutions as you grow? In a rapidly growing group practice, doctors may need to obtain coverage on very short notice and turnover may increase administrative responsibilities in the practice. This additional burden can be reduced if the advisor has the bandwidth to staff according to your current needs as well as your intended growth strategy. We can’t say enough about working with a firm that has experience and expertise in helping dentists, groups and DSOs with malpractice and other risk management topics. There is a huge amount of detail that needs to be considered, and one size does not fit all. This is where an experienced advisor becomes invaluable to your success.
This article was written by
Shawn M Johnson, ChFC®, CLU®, CLTC
Vice President, Business Development
Treloar & Heisel, Inc.
CA Insurance Lic. # 0M88197
and was originally posted on treloaronline.com. For a deep dive on medical malpractice insurance, you can learn more here: https://www.treloaronline.com/blog/tag/malpractice-insurance.
About Treloar & Heisel
Treloar & Heisel, an EPIC Company, offers dental and medical professionals a comprehensive suite of financial products and services ranging from business and personal insurance to wealth management. They assist thousands of clients from residency to practice and through retirement. Their experienced teams deliver custom-tailored advice through an active local presence, while their strong national network ensures that clients experience the same high level of service throughout the country. For more information, visit their website at www.treloaronline.com.