(continued)

In the previous section, we covered Step 3 and Step 4, which examined finding other coverage, and examining that coverage to be sure it’s right for you.  In this final installment, we’re looking at how best to pay for the new coverage, and looking at the long-term gameplan for your practice:

Step 5:  PAYING FOR YOUR COVERAGE.  If you are unable to secure replacement coverage from a traditional carrier (such as The Doctors Company or Medical Protective), you may need to consider the higher cost (usually 30-60% more) of obtaining coverage from a reputable, non-traditional carrier (such as Evanston, Admiral, General Star or Lloyds of London).  That’s where paying for the policy comes into play.  The ability to pay in installments is important to many practices.  Unlike traditional medical professional liability insurers (which offer convenient payment plans,) non-traditional insurers usually require the annual premium up front.  You’ll want to explore your financing options from your bank as well as the insurance premium financing options offered through your broker.  Generally, insurance premium financing requires a 30% down payment, but they offer a fairly competitive interest rate.

Step 6:  CONSIDER YOUR LONG TERM PLAN.  Once the fire is put out, take a little bit of time to look at the bigger picture.  The longer term goal is maintain insurance that suits your overall needs, in terms of expense as well as protections provided.  Here a few issues to consider:

• Will you need retirement tail in 5-10 years?  Consider that Non-traditional companies usually do not offer free retirement tail (protection for cases which may be filed against you after you retire).
• Can you make changes to your practice to improve your insurability? For example, if you were non-renewed due to a claim involving a certain procedure, ask yourself if the practice revenue for that procedure is worth the additional cost you are now paying for insurance.
• Can you take steps to illustrate your desire to improve patient safety?  Patient safety training and improved documentation procedures can go a long way to showing insurance companies you are serious about eliminating or reducing risk in your practice.

Receiving a non-renewal notice can be frightening and time-consuming.  A qualified independent insurance broker is your best resource and friend in such a harried circumstance.  Take a few deep breaths, then give Presidio Insurance Solutions a call.  We know how best to handle situations such as these, and we’re glad to be able to help!

Medical Malpractice Insurance Non-Renewal Series

1. Part One

2. Part Two

3. Part Three

4. –>> Part Four – Viewing

NOTE: This is the final segment of a 4-part article. Look elsewhere on this site for the other 3 medical professional liability insurance non-renewal article installments. Knowledge is power. Know what to do when Non-Renewal strikes!

In the previous section, we discussed first steps to take, and how to attempt to resolve the problem with your current medical malpractice carrier.  In this segment, we discuss Step 3 and Step 4, finding other coverage, and examining that coverage to be sure it’s right for you.

Step 3:  BEGIN THE PROCESS OF SECURING REPLACEMENT COVERAGE OPTIONS.  There is no need to panic.  Coverage is available.  It’s simply a matter of finding it and paying for it (more on paying for it below).  To find coverage, your broker will compile an application and all supporting documentation to submit to a variety of insurance carriers.  A good medical malpractice insurance broker can give you many insurance options in varying price ranges.  Often physicians going through a non-renewal panic and start calling and applying to companies through any agent and broker they can find.  This actually hinders your chances to obtain alternate coverage.  There are only 5-15 companies (depending on your circumstances) available and same company will receive applications from more than one broker representing a panicked physician.  If there is ANY conflicting information between the two applications it gives the appearance the physician is hiding material facts and can lead to the underwriter declining the application for coverage.  So, take it easy, breathe, relax and let your broker handle the problem for you.

What you DON’T want to do is to go from the frying pan into the fire. Alternate options from risk retention groups or newly formed companies are usually a very bad idea. Historically, alternative risk or new medical malpractice insurance companies have a failure rate exceeding 85%! Don’t be tempted by the cheap medical malpractice premiums offered by unscrupulous or simply naïve agents offering “coverage” from one of these fly-by-night companies. At a very minimum you should check with the Department of Insurance and AM Best to get information about the insurance company. As the adage suggests, if it sounds too good to be true, it probably is.

Step 4: CONSIDER ALL YOUR INSURANCE OPTIONS CAREFULLY.  Once your broker has completed the search for your replacement coverage, review all your options carefully.  Discuss the differences between the expiring coverage and replacement coverage options at your disposal.  Is there a deductible? A coverage exclusion?  Retirement tail?

Medical Malpractice Insurance Non-Renewal Series
1. Part One
2. Part Two
3. Part Three – VIEWING
4. Part Four

NOTE: This is Part 3 of a 4-part article.  Check out the next installment, where we discuss how best to pay for the new coverage, and developing a long-term gameplan for your practice’s medical malpractice needs.

In the previous section, we discussed what a non-renewal notice is, and some of the causes why you may receive one from your medical malpractice insurance carrier.  To reiterate, the first step was to determine why you were issued a Non-Renewal Notice.  In some cases, you may be able to work it out with your carrier.  Since doing so is, of course, the best solution, in this section, we talk about some of the very first things to be done about this worrisome circumstance:

Step 2:  TAKE ACTION  IMMEDIATELY!  Here are two actions you should take as soon as possible if you receive a letter of non-renewal form your medical malpractice insurance company:

• CONTACT YOUR INSURANCE BROKER, AGENT OR CARRIER REPRESENTATIVE.  Discuss your plan of action and lay out your options and expectations.  If you have a relationship with a trusted broker, this is simple.  If not, start asking around for recommendations to a good broker who specializes in medical malpractice insurance.  Of course, Presidio Insurance Solutions is such a independent broker and we are here to help with your needs.
• APPEAL THE INSURANCE COMPANY DECISION IN WRITING.  Compose a simple, humble, letter of appeal and include any facts you want the company to consider.  Again discuss this letter of appeal with your broker who can guide you through this process.  Appeals are not usually overturned but it does happen in certain circumstances.

Medical Malpractice Insurance Non-Renewal Series
1. Part One
2. Part Two – VIEWING
3. Part Three
4. Part Four

NOTE: This is Part 2 of a 4-part article.  Check out the next installment, which talks about the steps to take to secure other coverage wisely if you find you’re unable to come to an amicable solution with your current carrier.

Medical malpractice insurance is vital to all medical practices.  Most physicians and surgeons cannot afford to retain the liability created in the practice of medicine.  Medical Malpractice insurance may even be mandatory in your state.  So what happens when your traditional medical malpractice insurance company (such as The Doctors Company, Norcal, or Medical Protective,) sends you a letter informing you your insurance policy is not going to be renewed (called “non-renewed”)?

Most insurance policies include a cancellation condition wherein the insurance company is required to give you advance notice of their decision to non-renew your policy.  The time frame varies by state but generally is between 30 days and 90 days.  If you receive a letter of non-renewal it will usually contain the reason for the decision (thought providing an explanation may not be mandatory).

Step 1:  DETERMINE WHY YOU ARE BEING NON-RENEWED.  Here are a few of the more common reasons insurance companies decline to renew a medical malpractice insurance policy:

• Physician was involved in a severe claim (usually includes a very high payout by the company).
• Physician or medical group has a pattern of claim frequency.  It is estimated one in eight physicians will be sued this year.  Anything exceeding this ratio generally means the company is going to take a hard look at the policyholder’s practice profile and claim history.
• Changes to the practice like adding a medical procedure to the practice that is considered risky or simply unappetizing to the individual insurance company underwriter.  Even expanding the practice to include what the carrier thinks is  too many locations or physician assistants can lead to an underwriting review at minimum and a non-renewal at worst.
• Involvement in a medical board accusation can lead to non-renewal.  Particularly if the medical board is investigating a complaint involving unprofessional conduct (e.g. allegation of sexual misconduct, drug or alcohol use,)  or quality of care complaints.  In California there are approximately 7,000 medical board complaints filed against physicians and surgeons each year!
• Medical Malpractice insurance company goes out of business or decides not to continue offering coverage in your state.  Avoid this scenario by securing coverage through a stable, secure, reputable company with an AM Best Rating of B+ or better – keep in mind ratings are only one indicator of financial stability!

Medical Malpractice Insurance Non-Renewal Series
1. Part One – VIEWING
2. Part Two
3. Part Three
4. Part Four

NOTE: We’re releasing this as a 4-part series on Non-renewal.  Check back on this site for installment 2, the first steps to take when you get a Non-Renewal notice!