Lately, with so many medical groups and individual physicians practicing in telemedicine (or aesthetic laser, medispas, urgent care, integrative medical, wellness, chiropractic aesthetic, interstate telemedicine, etc…..) the standard insurance carriers have started to decline requests to provide coverage in these evolving areas.
So, insurance agents and brokers are required to creatively and resourcefully market these ‘risks’ (insurance jargon for ‘healthcare organization seeking insurance) to some ‘non admitted carriers.
MediSpas, Urgent Care Centers, Family Practices engaged in Integrative wellness, chiropractors incorporating aesthetic and nutritional counseling and telemedicine businesses start to look for professional liability insurance, they sometimes find the Admitted, standard markets to be closed.
So, understanding the difference for purposes of feeling good about and having confidence in your professional liability solution is important.
Admitted Insurance Carriers
An insurance company that is “admitted” has been approved by a state’s insurance department. The lingo you’ll most often hear in insurance contracts and informational materials is that an insurance company is “admitted by the state insurance department.”
This status means that…(well, it means that the insurance companies don’t have that much flexibility in designing their insurance product solutions:)
because, the insurance company must comply with all state regulations regarding insurance (which are established and overseen by the National Association of Insurance Commissioners). the policy forms are thought out, approved and ‘set in stone’ so to speak.
Theoretically, in the event that the insurance company fails financially, the state will step in to make payments on claims as necessary.
For business owners, buying from an admitted carrier means three things:
- You don’t have to pay various fees and taxes when you purchase a policy because the company’s status makes those expenses unnecessary.
- If the company fails for some reason (e.g., claims after a natural disaster deplete its reserve of funds), you have a guarantee that the state will step in and cover your claims.
- If you think your insurance company handled your claim improperly, you can appeal the decision to the state insurance department.
Non-Admitted Insurance Carriers OR ‘aka’ the Surplus Lines Association of Insurance Companies
An insurance company that is “non-admitted” has not been approved by the state’s insurance department. This means that…(my humble opinion is: this means that the insurance company has more flexibility to design a policy around an evolving profession (like healthcare, and specifically telemedicine !)
The insurance company does not necessarily comply with state insurance regulations.
- If the insurance company becomes insolvent, there is no guarantee that your claims will be paid, even if your case is active at the time of the bankruptcy or financial failure.
- If a policyholder thinks his or her case was handled improperly, he or she cannot appeal to the state insurance department.
HOWEVER:…
The Surplus Lines Market offers great solutions for insurance carriers needing to provide flexible coverage without committing the policy terms and conditions in ‘stone’ (which is what is required to file the form with the various states.
Unfortunately, this also requires a disclosure to the client that this insurance is being offered in the surplus Lines market.
To learn more about this important part of the Insurance Market, I’ve copied in some information from the California Surplus Lines Association:
http://www.sla-cal.org/about_us/abt_duties.html
Click on the about us link to learn about the companies, the goals off the association and the amount of business written through these companies in California.
Duties & Responsibilities of the Surplus Line Association of California
To fill the role of the advisory organization, the SLA’s duties and responsibilities include but are not limited to the following:
- Discourage and prevent its Members from violating California laws and regulations in making surplus line placements, and actively promote a high standard of integrity and service by its Members.
- Provide means for the receipt, record, and review of documents that Members are required to file with the Commissioner, as well as provide Members with guidance for compliance with statutory and regulatory requirements, to the fullest extent possible.
- Conduct security reviews and evaluations of the financial strength of non-admitted insurers eligible to operate or who wish to operate as surplus line carriers in California.
- Make confidential recommendations to the Commissioner regarding the suitability of a non-admitted insurer to be an eligible surplus line carrier in California.
- Assist the DOI in ensuring that those seeking coverage in the California excess and surplus line market have access to financially sound and reputable non-admitted insurers which are able and willing to pay all just claims.
- Help protect California consumers against fraud and possible insolvency of non-admitted insurers, by reporting to the Commissioner any known fraudulent or illegal insurance activity in the surplus line market.
- Accumulate premium data by broker and provide that information to the broker on a timely basis to ensure taxes are collected.
- Provide expert advice, comments, and assistance to the Commissioner in drafting legislation or regulations with regard to the matters relating to surplus lines business.
- Educate and assist Members in the understanding and interpretation of California surplus lines laws and regulations.
- Receive and disseminate to Members information relative to surplus line insurance on a timely basis.
- Communicate with and respond to questions from organizations of admitted insurers concerning surplus line insurance.
- Act as a liaison and build communication channels between the surplus line industry and the Department of Insurance.
- Make itself available to meet with representatives from the Commissioner’ office monthly or on an as needed basis.
- Be subject to an examination to ensure the SLA is performing the delegated duties as identified in the approved Plan of Operation.
- Cooperate with federal and state regulatory enforcement agencies.
For over 15 years, The Doctors’ Insurance Agency has been providing creative solutions from the non admitted insurance market for employment practices, directors and officers, and these miscellaneous, non-conventional professional liability insurance products.
The insurance companies have not yet settled on the contract language required when getting a state filing approved. Thus, the only way to provide the specific insurance that is required of these groups is to ask for the surplus lines’ underwriters to stretch their forms, to manually endorse, manuscript the coverage providing the needed assurance to the often entrepreneurial organizations that their risk is transferred to a solvent and strong insurance carrier.