Insuring unusual Medical Practices

How to insure the unique Physician practice profile

When the practice profile is unique, or just doesn’t fit the usual, customary and conventional, Like a medical spa or a family physician who runs an urgent care center, acts as a medical director for a local fire department and sees patients in nursing homes, the insurance niche that handles this is called surplus lines.

What is Excess and Surplus Lines and how does it impact Allied Health Providers and Mid Levels

Physicians, Midwives and other health care providers are often forced to find insurance at higher rates, or just do not find the right fit. With the continued presence and development of the surplus lines markets, these healthcare providers are newly finding that they can access a Medical Malpractice Insurance market that previously had been available only to very large groups and to practitioners who could not find coverage.

The spa procedures, utilization review, administrative duties or other procedures that are considered new and experimental had been met with resistance in a conservative insurance underwriting model considered too high risk or obscure to insure. Now,  Surplus lines companies can offer more flexible coverage terms and more competitive premiums than are available in the standard markets and many are highly rated.

Admitted Carriers vs. Non Admitted Surplus and Excess Lines Carriers

There are generally two types of medical malpractice insurance companies: admitted and non-admitted.  Both of the admitted and non admitted companies have to file a lot of financial data to be reviewed, by monitoring agencies.

they both have to show that they  meet  the state’s requirements for financial solvency and adequate capital.  Admitted companies must take one further step and submit to the state for approval  for its premium,  policy forms, and endorsements. What makes an admitted insurance carrier somewhat rigid (relative to the non admitted, surplus lines companies is that after the state has reviewed the company’s rates and forms, the admitted insurance company can sell only that which has been approved and only on the policy forms that the state has approved.

Non filed with the state DOI offers flexibility and affordable premiums

The Non-admitted or surplus lines insurance companies are approved to sell without these rate, form and endorsement filing restrictions.  They have more flexibility to insure new, evolving medical practices and procedures and locations with pricing that can be significantly better than the premiums offered by admitted companies with pre-approved premiums.

New Medical Niches: Telemedicine, Medical Spa’s and Medical Directorships:  Because admitted companies are audited, pay fees and become part of a protected, state backed insurance industry or association, it seems that surplus lines companies are better.    Surplus lines was designed to meet the needs of markets where there were no admitted companies.  When  Teleradiology and Bariatric Surgery and employment practices liability first emerged, there weren’t too many insurance companies willing to insure them.

Most states just didn’t have anything filed which could provide a solution to these types of risks. In order to show unavailability, most states required the agent/broker to  demonstrate that it sought this protection in the admitted market and was rejected by at least three companies.

To make it easier to do business, some states maintained a list of risks for which it recognized that insurance was not available, and for which three declinations were not necessary.

How much protection is offered by the State Guarantee Fund

When you are part of an admitted company, you have some protection by the state’s guarantee fund.  Most states maintain a guarantee fund which protects policyholders insured in the admitted markets from company failures.  So if the admitted company insuring a party goes bankrupt, the state fund will step in and take over management of all claims.

Usually, the state seeks a purchasing company and/or settles for less than 100% of the claim judgment.

There are some who argue that history has shown that state management of these claims is not as effective and that they would have been defended by a solvent insurance company. Additionally, when a state fund kicks in, so also do taxes against the remaining admitted carriers.

The surplus lines industry is an integral part of the health care facility and provider landscape, providing capital, solutions and bringing down the cost of insurance.

The Doctors’ Insurance Agency continues to work with surplus lines companies to find insurance for the daily changes that are evolving in the insurance market:  Clinical Trials Malpractice Insurance, Diagnostic Laboratories Malpractice Insurance, Medical Directorships Malpractice Insurance and Medical Spas Liability Insurance are all examples of the surplus lines market developing financially solid, reasonably underwritten and available insurance solutions to assist in these small and growing businesses to exist.



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