Medical malpractice insurance can be confusing. There are many commonly used terms and phrases used in malpractice insurance that most people are unfamiliar with. If you have found yourself wondering what your medical malpractice insurance broker is talking about or just want to learn a little more about what goes in to a policy, hopefully our malpractice terms dictionary can help.
POLICY TYPES
Claims-Made Policy – An insurance policy that is triggered when a claim is made during the policy period, regardless of when the act the claim is in reference to occurred.
Occurrence Policy – A policy that covers claims regarding incidents that occurred during the policy period.
Tail Coverage – A provision that permits an insured to report claims made after a policy period has ended, if the act occurred during the policy period.
INSURANCE CARRIERS
Risk Retention Group – A state-chartered insurance company that insures commercial businesses and government entities against liability risks. Only businesses can be members of an RRG.
Risk Purchasing Group – Allows a group of insureds engaged in similar businesses or activities to band together to purchase insurance coverage from an insurance company.
Physician-Owned Insurer – Can be either a Mutual Insurance Company or Reciprocal Insurance Company.
Mutual Insurance Company – Owned and managed by policy holders. Profits are paid out to policy holders or used to reduce premiums.
Joint Underwriting Association – Nonprofit risk-pooling association established by a state legislature as an insurer of last resort when affordable insurance coverage is not available.
Trust – provide coverage to members, who are required to provide a capital contribution in order to join.
Non-Admitted/Surplus Carrier – A carrier that is not licensed to sell insurance in a given state, but is allowed to do so anyway because they fill a special need that is not being met by the admitted carriers.
A.M Best Rating – Rating of financial health of an insurance company. Ratings go from A++ to D-.
POLICY TERMS AND INFO
Quote – The insurance policy terms that an insurance company offers after an application is completed and loss history is sent.
Indication – An insurance company’s best guess as to how much it is going to cost to insure a doctor based on general information such as specialty, location and claims history.
Informed Consent – A physician’s duty to fully explain a medical treatment or procedure to a patient prior to performing it and get the patient’s consent to perform it.
Mature Premium – Premium amount for a claims-made policy that has reached its maturity date. Claims-made policies usually reach maturity after 5 years.
Non-Renewal – Cancellation of a policy at expiration by the policyholder or insurer.
Per Claim Limit – The maximum amount that an insurance company will pay on a single claim.
Policy Term – Time period when a policy is active, usually 1 year.
Premium – Amount of money paid to receive insurance coverage.
Prior acts – Coverage for dates prior to the start of a claims-made policy.
Loss Ratio – Ratio of losses incurred divided by premium. Usually shown as a percentage.
Retroactive Date – The date back to which prior acts coverage covers for an insurance policy.
Risk Classification – An insurance company’s classification of risk based on losses, specialty and procedures being performed.
Risk Management – Process of reducing possible unfavorable outcomes that could arise from medical procedures.
Standard Risk – Physician or entity that is eligible for standard insurance coverage.
Substandard Risk – Physician or entity that is NOT eligible for standard insurance coverage and is subject to extra restrictions and higher premium due to being higher risk.
Consent to Settle – The insurer must get written permission from the insured before making a settlement with a plaintiff.
Defense Cost – Cost of defending a claim.
Limits of Liability – The limits of how much an insurance company will pay out per claim and per year. (Example: $1,000,000/$3,000,000.)
Locum Tenens – Coverage for a substitute physician. Covers the substitute without the need to obtain extra insurance.
Portability – Ability to take the policy to another state without the need to buy tail coverage.
Premium Credits – Discounts offered by insurance companies for risk reducing activities.
Declarations Page – The 1st page of an insurance policy. A declarations page includes important information such as the name and address of the insured, policy number, policy limits, policy period, premium amount and retroactive date.
Endorsement – A form that changes or adds to provisions in a policy.
AGENTS AND UNDERWRITERS
Underwriter – An employee of an insurance company that evaluates the risk of insuring a physician and accept or deny their request for coverage.
Independent Agent/Broker – An insurance agent that sells policies provided by several different insurance companies. Independent agents receive a commission for the policies but are not employees of the insurance company.
Captive Agent – An insurance agent that only sells insurance from one insurance company.
CLAIMS INFO
Claim – A lawsuit made against the insured.
Claims Reserves – The amount of money the insurance company has set aside for unsettled claims.
Date of Incident – The date the alleged malpractice took place.
Date of Reporting – The date the claim was reported to the insurance company.
Indemnity – Amount paid to the maker of a claim in a malpractice case.
If you need clarification on any of these terms or are interested in learning more call Presidio Insurance Solutions at 805-499-7300.