Key Factors in the Malpractice Marketplace and How to Adapt
SALT LAKE CITY (December 17, 2013) – With most eyes on the potential implications of the Affordable Care Act (ACA) and the ongoing soft Medical Professional Liability (MPL) market, industry leader MGIS notes that brokers and physicians should be wary of other critical forces shaping the marketplace in 2014. MGIS is one of the largest and oldest providers of insurance products for physicians. Company President Jeff Brunken reports that the ongoing soft market and proliferation of low-cost add-in coverage options are two areas physicians and brokers should closely study and address in 2014.
“We are at a dangerous point in the medical malpractice insurance market cycle,” notes Brunken. “We’re at historically soft levels as a result of abundant capacity attracted to this market segment based on profitability. However, at some point excess capacity meets market saturation and ROI lines will begin to cross and trend downward, meaning that insurers will again turn to higher prices to increase profitability and ensure market stability.”
Brunken notes that while insurance buyers may be tempted to eke out every bit of savings, buyers and their brokers would be wise to use this competitive market to move to quality coverage as top-rated carriers are also aggressively competing for business. When the market hardens, prices increase and insurers become more selective about whom they insure. Buyers who wait may face difficulties finding coverage. “If some carriers start to falter, and remaining carriers ratchet down on underwriting guidelines, it could be harder to find good insurance,” says Brunken. “Now is the time to remember the saying about if something is too good to be true, it probably is.”
Industry experts note that another factor influencing the market is that MPL carriers are bringing a range of add-on coverages to the market – often offered for free – or at very low cost. For example, a carrier may offer a $50K cyber insurance limit. However, upon examination of the “math” for such offerings – in the event of a cyber-breach, if a physician has 10 to 15,000 current and former patients to inform – and as the average cost to notify patients of a cyber-breach is $2 to $3/each – that policy will barely cover the initial mailing and none of the other steps that must be taken to address a cyber-breach. Another example is RAC audit or regulatory insurance – some carriers offer $25K in coverage and again, that fee barely covers a few meetings with an attorney.
Conversely, highly rated carriers typically provide a comprehensive and integrated cyber-liability insurance package that provides full coverage including services such as an experienced legal counsel, a breach coach, crisis communication, patient notification and credit monitoring. Often, business interruption coverage is also included. And all of this is typically offered with limits up to $1,000,000 and at competitive pricing. “The price between the soft market coverage add-on and a stand-alone comprehensive product is just a few dollars more – well worth the investment,” notes Brunken. Here are additional tips Brunken offers to physicians and brokers for the New Year.
- Physicians should review current coverage and policies carefully with their broker. Are you covered for your current practice specialty, business structure, patient and service mix?
- Remember that the “shiny objects” dangled by some carriers during soft markets will go away when the market hardens.
- Choose your carrier for their ability to pay your claims, not for the “trimmings.”
- Study your current insurance carrier. What is their rating? (It should be at least an A-.) How long have they been in business? What is their reputation? In the event of a claim, you want a strong, stable experienced partner.
- Exploit the savings provided in the current marketplace to invest in improving the medical practice – such as more education on error prevention and utilization of risk management tools, optimizing EHR, etc. This way, when the market does turn, your practice will be a better risk. Groups that are able to improve their performance during this flush period, will achieve long-term savings even after the market eventually hardens.
- Look for partners that can help you develop and implement risk management programs. Another benefit of top-rated carriers is that many provide their clients with resources, education and tools to help prevent claims; smaller low-cost carriers may not offer that service.
For additional information and tips, please visit mgis.com
The MGIS Companies, Inc. is the nation’s leading provider of insurance products and services specifically for physicians. For more than 44 years the company has provided specialized group disability insurance, medical-professional liability insurance, and practice improvement ancillary products and services to more than 10,000 physician groups, 900,000 group members, and 300,000 physicians nationwide. The MGIS group disability policies are backed by Sun Life Financial®, one of the largest and highest-rated insurance companies in North America. The MGIS medical-professional liability insurance policies are backed by Freedom Specialty Insurance Company, a Nationwide® Company, rated A+ (Superior) by A.M. Best. With a rich tradition of service excellence, MGIS works exclusively through local brokers and benefit advisors to provide the ultimate in personalized, physician-focused insurance services. For more information visit our website mgis.com.
Scott Public Relations