There are many reasons to change Medical Professional Liability insurers. The most common reason is due to an increase in premium. The medical malpractice insurance market has been quite stable since 2006 with carriers holding their rates steady, even decreasing them in competitive locations or favorable legal venues. While the Medical Professional Liability Insurance market is relatively steady, costs continue to be high compared to other lines of commercial insurance coverages. When determining where to cut costs in your medical practice, do not look towards changing insurance carriers from a claims-made policy without purchasing tail coverage.
For physician professional liability insurance, most insurance carriers offer coverage on a claims-made basis. A claims-made policy covers claims that are made during the policy period, while it is active. When a claims-made policy is cancelled, the insurance carrier will offer an option to purchase tail coverage for those claims which may have occurred (during the policy period) but have not yet been reported (discovered). Tail coverage is necessary when a claims-made policy is cancelled or non-renewed and the insured physician cannot secure retroactive or prior acts coverage from a new insurance carrier. The cost of tail coverage can be prohibitive and is usually based on a factor two to three times higher than the expiring, undiscounted premium. The ramifications of not securing tail coverage can include loss of hospital privileges, medical license suspension/restriction (state dependent), declination of new insurance coverage. Having adequate insurance coverage in place for the defense and payment of a potential medical malpractice claim is one of the most important reasons to purchase tail coverage.
Physicians who try to mitigate the cost of increasing insurance premiums by switching insurance carriers as premiums increase due to the natural step maturation of the claims-made policy, automatically create a gap in insurance coverage. And while thinking they show a fluid insurance history, they have created a gap in coverage for the period of time preceding their current insurance policy when they do not purchase tail coverage or request retroactive coverage. Keeping continuous coverage with a reputable, stable and financially secure insurance carrier is an important part of your medical practice success. Jumping from carrier to carrier is not a sound business practice and can affect your future insurability, employment and privileging. We at the Doctors Insurance Agency can help walk you through the necessary coverage issues when you do need to change carriers due to employment, rate changes, non-renewal, cancelation or other reasons.