According to the New England Journal of Medicine, one in 14 doctors will have a Medical Malpractice claim each year. From clinics to large community hospitals, correctly evaluating the level of Medical Malpractice insurance can have a dramatic impact on the cost of premiums and claims, often measured in the $100,000’s. While the number of claims paid has remained relatively stable, the growth in both size and frequency of large claims has been increasing, pretty dramatically. It is important to review your coverage, claims data, and limits to ensure you are keeping up with the market.
What factors influence the limits you should consider?
The types of services that you offer at your facility can and should have a significant impact on the level of coverage you are choosing and your overall premium. While a 1/3 policy ($1 million per claim limit/ $3 million aggregate limit) has been the standard for many groups, many specialists (OB/GYN, Orthopedics, other Specialty Surgeons) have been choosing higher limits, for good reason. Looking at average claims data for specialties and reviewing the procedures and services offered at your facility, should be an important starting point in determining the correct amount of coverage needed.
Graphic Provided by MedPro Group
Do higher limits really lead to higher trial verdicts?
Some healthcare organizations or physicians choose lower limits because they believe that carrying higher limits can signal that they can afford to pay higher trial verdicts. Is that true? It depends. In our northwest region, we see fewer large verdicts (greater than $10 million) in Montana and Idaho when compared to larger metro areas of Seattle and Portland. When having discussions with your broker, it is important to make sure that you are sufficiently covered depending on your organization’s risk tolerance, your services and specialties, and potentially other factors, such as regional differences.
Should you consider self-insurance?
For some large organizations and hospital systems, in order to create more predictability in annual costs, they have decided to self-insure for the professional liability risk, including physicians and other healthcare providers at their facilities. For organizations considering self-insurance, several factors should be considered, including:
- Future Modeling Based on Loss and Premium History
- Strength of Organization’s Risk Management Program
- Risk Appetite over the Long-Term
- Financial Feasibility of initial costs and long-term Commitment to a Captive or Self-Insured Program
Claims advocacy can make a significant difference
While having the correct limits for your organization is crucial, Claims Advocacy can also make a significant impact on the overall costs of your medical malpractice program. Having a consistent and streamlined claims process can effectively lower the overall cost of handling and settling a claim. Having an experienced team and resources available to defend, manage and mitigate claims and protect your reputation is key.
Choosing the right Medical Malpractice policies and limits doesn’t have to be a guessing game. By reviewing claims history, understanding your risk tolerance and looking a future trends, you can take a more proactive and strategic approach to budgeting, planning and potentially controlling costs.