Today, we worked on three different physician’s policies which required some adjustments. The challenge with medical malpractice insurance is that physicians’ generally (that is, when they have ‘claims made’ malpractice insurance policies) cannot begin a new policy without incurring two potential problems:
1) they open an attractive deep pocket with a secondary set of limits (which can be a good thing because it protects the insured and draws a line in the sand between one practice and another), however, there is a belief that where there are limits of insurance there are high demands for settlements.
2) Each claims made policy carries with it an expensive tail premium.
Because of these two problems, we work hard where possible, to cover the entire physician practice exposure with just one policy. There is certainly enough insurance with just One Million dollar limit per incident ; And, as long as the practice will allow for one policy (i.e. the additional practice is not covered by a large ‘self-insured’ academic or large group policy), then keeping just one policy keeps it simple and much less expensive.
The underwriting adjustment that must be made to the group policy is called an entity, vicarious liability premium. Entity premium is 10 % of the underlying physician’s premium so when a doctor is moved off of a policy, the underwriter develops that same 10 % and attaches it to the entity; increasing the overall entity premium for the group (appropriately to reflect the physician’s affiliation. And, the physician carries his/her own separate policy with the flexibility of covering them at any and all locations where needed.