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MedMal Insurance: When Buying Locally Isn’t Necessarily Better

MichaelKubik_headshotBy Michael R. Kubik

Don’t apply the latest grocery shopping trend to making one of the most important purchasing decisions in your practice of medicine. Buying locally grown lettuce may make sense, but using the same wisdom for selecting an insurance company for medical professional liability insurance may not be your best choice. While local companies may promote their proximity as an advantage, similar resources, knowledge and services for protecting you and your practice may be found with a reputable regional medical professional liability insurance company and at a better value. It’s time to set the record straight on the pervasive misconceptions about regional versus local companies. The following is what you should know when you are in the market for your practice’s long-term protector, ally and advocate.

Some believe that when large, regional companies enter a new market it will have a deleterious effect, but the opposite is actually true. This scenario may help strengthen the local market and stabilize rates, and often times results in decreased rates for physicians. Steady rates make it easier to focus on medicine and not the next premium increase.

Although a regional company may be based in another state, consider whether it has a local office and staff. An important factor is whether you will directly interact with those staff. If so, do they have experience specifically in your state? In some instances, local staff have spent their entire careers in a state even when the parent company is domiciled elsewhere. When it comes to needing expert advice, what matters is that they understand your unique needs and the relationship you have with them. Local staff will be able to do all of this and more regardless of where your premium check is sent.

Of critical importance is whether the company is rated by a well respected insurance industry rating organization. If so, how does it compare to other companies you are considering? There are numerous examples in which local companies are not rated as highly and, in some cases, are not rated at all. When it comes to analyzing a company’s financial strength and stability, it’s important to have information from an unbiased and expert source. Without third party credibility to help you make a decision, you may unknowingly find your local insurance company faltering in a few years. Choose a company that stands the test of financial strength and will be able to protect you throughout your career.

Insurance companies look at your past loss experience to understand your history and any potential for liability. Have you done the same with your insurance company? Before putting in your application for a policy, do your research and understand the company’s history. Look at how much experience it specifically has in medical professional liability insurance. Has its corporate structure and operations undergone multiple changes or have they remained unchanged for multiple years? If a company has restructured its operations, it may be a sign that it has not found a formula that works well yet. Also, ask whether the company has left a state in which it once did business. If so, it may happen again. In the past, several New Jersey insurance companies became insolvent. Don’t base your decisions on zip code alone – do your research and select a reliable company.

Once you’ve examined the company’s past performance, the next step is to see how it’s performing today. Some key characteristics of a good company are its national standing, number of policyholders, range and concentration of insured specialties and types of coverage offered. If any of these characteristics don’t match your needs, it may be wise to look elsewhere.

When you’re in the midst of deciding between carriers, it can be a confusing and complicated process with high stakes. Ask yourself who represents your interests and understands your needs. If you are working with an independent insurance agent who is an expert in medical professional liability insurance, you know he or she works for you and not the insurance company. Place your trust in an independent insurance agent and gain an ally that can help you sort through the hyperbole. Additionally, look for a company with a Board of Directors composed mainly of practicing or retired healthcare providers. Companies that place healthcare providers at the highest level of leadership are inherently infused with a deeper appreciation and understanding of the unique challenges you face in today’s tumultuous medical environment. Board members with healthcare backgrounds have been in your shoes and are now at the helm of the company making decisions about the direction of the company and the security of your future.

Another important characteristic of a good company is the expertise of the people who will help you mitigate your risk. If most, or all, of a company’s risk management staff are healthcare providers you will most likely be able to communicate with them on a higher level. It’s also important to determine in advance what services are offered by the risk management department. A hotline that goes directly to a risk management representative who will be able to answer your questions and offer suggestions is an asset during stressful situations. One popular offering is office appraisals. Risk management representatives visit your practice and walk through every facet of your day and offer suggestions of ways you can limit your liability and improve patient safety. These office appraisals should also have benchmarking capability so that you can understand how you compare to your peers. See if the company also offers easily accessible continuing medical education (CME) activities, perhaps online or through a company publication. This will help you conveniently receive the CME credits you need when you need them. With locally based risk management representatives who can provide these services as well as online CME activity offerings, the issue of the home office’s geography loses its relevance. A company with these types of services and resources may ultimately equate to premium savings in the long run by limiting risks and losses for you and all of the company’s policyholders.

If a claim should arise, you want to make sure your insurance company has proven itself in court. A similar zip code doesn’t make a company better at defending your claim. The number you should pay attention to is the company’s win rate. Your carrier should have an expert defense panel of highly specialized medical liability attorneys from your area who are familiar with the local courts and state laws and who have a record of receiving favorable verdicts. If the defense win rate is high, your next question should be whether the company utilizes and encourages alternative dispute resolution. This could save you years of time, stress and aggravation if a claim arises. Also, check whether there is a “consent to settle” clause in your policy. This will ensure that if you want your day in court, you will get it and have the backing of your insurance company and its appointed defense counsel.

Finally, ask yourself how much a company really cares about its “neighbors.” As a protector of the medical community, a medical professional liability insurance company should do more than just issue policies – it should care about its community. Does the carrier you’re considering offer confidential emotional support programs for policyholders to assist them during the stress of litigation or other liability concerns? And because you are more than just a doctor, ask whether an insurance company promotes total physician well-being and supports your local physician health services program.

Clearly, there is much to consider when selecting a company that will provide the crucial protection and services that put your mind at ease. For a physician weighing all of his or her options for coverage, these important factors are the essential characteristics of a good carrier. The least valuable asset of a medical professional liability insurance company is its zip code. After making your choice, what is most important is that your insurance company is committed to being there for you now and in the future – not because of shared interests, state regulations or neighborhoods – but because if an issue impacts you, it is important to the company.

Michael Kubik is vice president of marketing for ProMutual Group, one of the top 10 providers of medical professional liability insurance in the country. ProSelect Insurance Company, a subsidiary of ProMutual Group, provides medial professional liability insurance protection to more than 3,750 healthcare providers in New Jersey and is the third largest carrier in the state. For more information, visit www.promutualgroup.com.

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