Medical Malpractice

Claims-Made - The policy in force today / when the claim is made, responds to a claim. 

Pros for Claims-Made coverage: 

• Premium rates are very low in the early years of claims-made coverage.
• All medical malpractice insurance carriers offer claims-made policies.
• If your current carrier has financial problems, you can transfer the liability to an A.M. Best rated carrier, preferably A- or better

Cons for Claims-Made coverage: 

• It is not as easy to switch carriers as some other forms of coverage.
• If your current carrier is in financial trouble, a new carrier may not pick up your retroactive date.
• The cost of a tail could be up to 250% of your expiring premium.
• If you decide to sell your practice many acquiring companies will require you to purchase a tail.

Occurrence – The policy in force on the date of the event / when the event occurred, responds to the claim. 

Pros for occurrence coverage: 

• You have individual limits of liability for each year of coverage for as long as the insurance carrier is in business.
• There is no tail to purchase.
• Since there is no tail to purchase, your policy is easily transferred from one carrier to another. 

Cons for occurrence coverage: 

• If you purchase occurrence coverage with a carrier that becomes insolvent (goes out of business), you are only covered to the limits of the state guarantee fund (this can differ by state).
• Occurrence usually costs more.
• Not as many insurance carriers will offer occurrence coverage because they are liable for that policy period indefinitely. 

Modified Claims-Made – Reacts like a claims-made policy but is paid like an occurrence policy. The tail is basically pre-funded, so you don’t have to ever purchase a tail. Many carriers have names like “permanent protection policy” or “claims-made plus”. 

Limit of Liability / Aggregate Limit 
This is the maximum amount a carrier will pay for all claims that occurred and were reported during a given policy period. Therefore, if your policy limits are $1M / $3M, you have up to $1M per claim, and up to a $3M limit or aggregate for all claims in that policy period. 

Retroactive (Prior Acts) Coverage
With a claims-made policy, this coverage provides insurance for claims arising from incidents that occurred while insured on a previous claims-made policy. With retroactive coverage, your new policy covers claims that may arise from when you were with your prior carrier. With such coverage, purchase of a tail is not necessary when switching carriers. 

Tail Coverage
With a claims-made policy, if a physician decides to stop practicing medicine, or switch to an occurrence policy form, they are required to purchase an extended reporting endorsement know as a tail or tail coverage. Since a claims-made policy responds when a claim is made, if you no longer have an active policy, you would be liable for any claims that are presented today. This is true for all incidences that happened for the entirety of when you previously had a claims-made policy. Therefore, the tail coverage provides you with permanent protection for those previous years of exposure up until your retroactive date. Most carriers will offer free tail provisions if physicians meet certain criteria, such as retirement, years with a carrier, death, or permanent disability.

Gap in your Insurance / Gap in Coverage 
In a claims-made policy, after the policy period has ended and is not renewed, a physician needs to purchase an extended reporting endorsement. This is also known as a “tail". If the physician moves to another carrier, a tail does not have to be purchased if the new carrier offers prior acts or “nose” coverage. If a tail is not purchased or a new carrier does not offer prior acts coverage, then the physician is considered to have a “gap in coverage”.

This is a problem because: 

• The physician would be liable for any claims that arise during the gap in coverage.
• A new carrier may refuse to provide new coverage if you have a previous gap.
• Some states will revoke your medical license. 

Risk Strategies has streamlined the quoting process to give you accurate pricing. Typically, we only need the following items from each provider:

• Curriculum Vitae 
• Current Insurance Declaration Page
• Claims History/Loss Run report
• Number of hours the physician typically works per week

Upon receipt, we negotiate with all the top carriers in your state to find the best fit and pricing for your practice. We present quotes, choose the market and handle the administrative paperwork for your practice to ensure a smooth transition.

An admitted carrier is an insurance company who files their rates and is approved by the specific state Department of Insurance.
A Risk Retention Group (RRG) is a liability insurance company owned by its insureds. All insureds must be engaged in similar businesses or activities. They file under federal guidelines and are not subject to all the laws of a particular state’s Department of Insurance.

Key items to consider when choosing an admitted carrier vs. RRG include:

• RRGs are not eligible to participate in State Guaranty Funds
• The importance of financial rating and longevity for RRGs since not protected by State Guaranty Funds
• State controlled pricing vs greater rate flexibility for RRGs
• Not all RRGs are created equal. RRGs can be a great option if it is the right RRG with the correct carrier or leadership behind it
• Does RRG have a cut through endorsement?

• Financial strength (AM Best rating A or higher)
• Longevity in the marketplace
• Choosing a carrier with an unconditional consent to settle provision
• Claims-Made and Occurrence options
• Physician advocacy
• Claims handling and Risk Management Services
• Discount offers (joint defense and consent to settle discounts are not recommended)