How do malpractice Insurance Carriers develop Individual Physician Claims Made Premium Rates?

Regardless of whether you are an independent aesthetician, a contracted  mid level provider, a telemedicine consultant  physician or are managing a healthcare facility, the costs of maintaining (and leaving) your Medical Professional Liability Insurance policy is a big business challenge (often one of the most significant challenges faced by our clients and policyholders).

Tail Insurance in medical malpractice insurance might be avoided and the premium savings can total into the thousands.

The ongoing ‘real time’ cost of insurance is tough, the state in which you practice can make or break the premium amount.  And, the untold story of potentially higher (lasting costs) of medical professional liability insurance is :  TAIL.  The price you pay to cover you going forward for the services you provided in the past.

There are ways around paying for tail; without a skilled insurance agent, broker or a creative group administrator, you could unnecessarily pay 50 – 75 % more than necessary.

The costs of Tail Insurance are based upon the underlying policy,  the policy that you cancel before taking out your tail policy.

These policies (tail policies) are technically referred to as ‘Extended Reporting endorsements’.  This name is logically based upon the benefit that they provide on the cancelled (former insured) physician.

These costs (the premium) are determined by underwriting guidelines and actuarial studies, by individual loss experience (earning premium credits to mitigate and reduce the risk and cost) and the group’s commitment to risk management programs.  Your own individual policy premium will reflect the risk and loss history of your medical specialty and territory.

Rating Basis for Physician Medical Malpractice Insurance

In general, rates are determined by a number of factors which include:

·         location of practice, (surprisingly the variance in rates between states can be significant); one state may set the rate at $ 5,000 and in another state the same specialty is $ 15,000 (rates can vary as much as 300 %) depending on the payouts and settlements in that venue.  

·         Limits of liability, previous claims history, number of hours of practice, education/board certification, associations with other practitioners are all part of the premium calculus.

Location, limits, # of hours, specialty are hardwired into the rate (calculated by actuaries) while others may be up to underwriter discretion, i.e., scope of practice, education, risk management practices, etc.  Practice profile, the services and extent (and perceived invasiveness of the procedures) will determine your rates as well.

If you serve as a physicians supervisor (overseeing other healthcare practitioners) or if you contract out as the medical director establishing protocol, hiring processes and quality/utilization review and control, your rate could reflect that higher amount.

Indirect Supervision of Providers requires special premium and endorsements for your medical professional liability policy.

With regard to supervision, in general – you may be assessed an additional premium to provide that vicarious liability insurance policy that will cover you in the event you are named in a claim against one of the supervised. Not all specialties are assessed.  Anesthesiologists are not charged additional premium for working with  CRNA’s. Of course, each has their own unique premium, and there may be an entity separate limit (protecting the healthcare organization). 

The entity can range in added premium from 10 % or lower depending on whether you share limits with the entity or carry a separate entity limit.

That entity limit of insurance has its own premium  that is a percentage of both Ane’s and CRNA’s:

 There are exceptions to every rule which is left up to the underwriters discretion and rules and rate filings for each individual state.  The exceptions and rules are important elements not to overlook.

The Doctors’ Insurance Agency specializes in understanding these exceptions and informing our partner carriers of the details of practice that fit into risk profile rates and affinity rating groups.  This specialized insurance product and niche knowledge can save you a lot of premium 

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