What to Do when Non-renewed for Medical Malpractice Insurance
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!