According to Crittenden Medical Malpractice Insurance Newsletter, the malpractice insurance industry is going to experience an increase in the number of large jury verdicts.
By large jury verdicts, the newsletter is referencing settlements of 10 Million or more. Many of these, actually, almost all of these are appealed down or not even paid out due to the entity or group filing bankruptcy…however the verdicts that are appealed and still require payout still are depleting the reserves of the industry.
The number of these claims is still low enough to not immediately effect the reserves and the financial health of the malpractice industry; however, if the claims per 100 of doctors (the frequency) of the claims picks up, then there will likely be trouble for insurers as many have underpriced thee exposures that they are carrying. Many of the large jury awards are in the core specialties, surgical and facility specialties, which are still performing well for the medical malpractice insurance companies…and, many which do suffer these law suits have discovered how to fight and settle economically. the economic damages will continue to be the primary driver to the verdicts. any physician specialty which treats high wage earners, or is in the chain of care to neurological damage injuries to newborns are among the adverse events that receive the high awards. There have also been some large settlements in elder care, medial homes and nursing homes.
The claims that can involve missed diagnosis can be very high loss claims. The missed diagnosis claims, according to a physician Insurance Association data study, results in some defense payments exceeding 3 Million and a payout average of over $ 200,000.
If nothing else, these statistics should provide compelling reasons to carry limits of higher than $ 500,000 per claim. The long tail claims make the issue of tail paramount to the insurance equation. If you can be a part of an occurrence policy, then the tail is not an issue.
As for the difference between claims made and occurrence, the simplest way to explain it, is that an occurrence policy has its own, built in tail. As long as coverage was in force during the time of the procedure, it will continue to respond even after the policy is cancelled. The policy is more expensive because of that.
With a claims made policy, you’re covered as long as the original procedure was performed during a covered period and the policy remains in force, or you’ve purchased a tail endorsement for it.
There are some specialties with longer tails, which means that the time, the duration of time of discovering the injury, and therefore presenting the claim can be very long, it is said that Neurosurgery, Orthopedic Surgery and Anesthesiology are shorter tail periods than Pediatrics and Radiology. That is to say that in the former specialties, you can see the harm earlier, than in some of the other specialties which have a longer discovery. With an estimated 35,000 physicians identified as hospital based, and even more identified as outpatient or urgent care based, there is going to be an increasing demand on these specialties and allied health providers. TDC patient Safety will continue to focus on education, teaching these physicians and their staff about the importance of effective communications, handoffs and thorough file review to understand all contra indications and eliminate the likelihood of the medication errors.
Slowing down and following protocol is another one of the key lessons studied and shared by our patient safety specialists, as the chance of missed diagnosis decreases appreciably when the staff and ancillary providers follow a closely supervised model.
Right now, the reserves of all companies providing medical malpractice insurance for hospitalists, urgent care and emergency medical providers generally are strong, but this is a trend worth watching closely. The Doctors’ Company remains a strong choice for any specialty because of this dynamic of the long tail. you are not just purchasing a real time, present day insurance policy. You must choose a carrier that is sufficiently funded and continuing to fund responsibly for future claims. Indeed, reserving for future claims, based on careful, disciplined adherence to actuarial science and underwriting practices is what makes The Doctors’ Company one of the nation’s model insurance carriers.
Reserve strengthening and rating actions related to large losses can keep a company solvent and well-funded. The Doctors’ Company will always be on the front end of the curve of watching their loss ratios, premium sufficiency and frequency trends so that they are well positioned to fund the claims of the future in these front line specialties.