Exploring Your Options for Medical Malpractice Coverage
Navigating the complex world of medical malpractice insurance can be daunting for healthcare providers and organizations. One major decision is whether to work with a direct writer or an insurance agent. Here’s a comprehensive guide to understanding your options and why considering multiple perspectives can be beneficial.
Understanding Direct Writers
Direct writers are insurance carriers that sell malpractice coverage directly to healthcare providers. This can seem like a straightforward choice, often perceived as more cost-effective since it cuts out the middleman. Direct writers may offer the convenience of dealing directly with the insurer, and for some, this relationship can feel more personal and direct.
However, it’s crucial to understand that the direct writer’s market approach can sometimes limit the range of options available. When you only consider direct writers, you might miss out on alternative policies that could better suit your specific needs. The direct writer model is built on the assumption that the insurance product and service they offer is the best or only option you need to consider.
Debunking Common Misconceptions
A common misconception is that direct writers always offer better deals because they eliminate agent commissions. While it’s true that agents earn commissions, this does not necessarily mean that working with a direct writer will always save you money. The healthcare landscape is rapidly evolving, and insurance policies must adapt to these changes. For example, rising litigation costs, known as “nuclear verdicts,” and changes in regulatory requirements significantly impact malpractice insurance costs and coverage details.
The Value of Insurance Agents
Insurance agents bring several benefits to the table that can be invaluable in navigating this complex landscape:
- Variety of Options: Agents typically work with multiple insurers, providing a broader range of policies to choose from. This diversity can help you find a policy that better meets your specific needs and budget.
- Detailed Explanations: Agents can help you understand the nuances of different policies. For instance, some policies may offer tail coverage (extended reporting period) for providers who retire or leave the practice, while others might not. Settlement terms can also vary widely; some policies might reduce your coverage if you refuse a settlement, while others might not.
- Negotiation: Agents can often negotiate better terms on your behalf, leveraging their knowledge and industry connections to secure more favorable conditions.
Real-Life Example
Consider the case of a nonprofit medical clinic. Initially, they opted for a direct writer, thinking it was the best choice. The practice administrator, with decades of experience, believed the direct writer’s quote was the best deal available. However, after some persuasion, they reviewed additional options provided by our own in-house malpractice liability expert Drew Colwell.
This review process revealed significant shortcomings in the direct writer’s policy. For instance, the policy lacked essential tail coverage, which protects the practice from claims made after a provider leaves. Additionally, the settlement terms were restrictive, reducing coverage significantly if the clinic chose to fight a claim rather than settle. These crucial details led the clinic to select a more suitable and cost-effective policy provided by Drew. In the end, the practice administrator acknowledged that the his persistence helped them avoid an inferior policy that could have cost them more in the long run.
Key Considerations When Choosing Coverage
When evaluating medical malpractice coverage, consider the following:
- Coverage Scope: Ensure the policy covers all potential liabilities, including tail coverage for providers who retire or leave.
- Settlement Terms: Understand how the policy handles settlements and whether it imposes penalties for choosing to go to court.
- Cost vs. Value: Don’t just look at the premium cost. Consider the value of the coverage provided and how well it meets your needs.
- Industry Changes: Stay informed about changes in the healthcare industry that might impact your insurance needs.
Final Thoughts
Healthcare providers should not assume that working with an agent always results in higher costs. Agents have in-depth industry knowledge and negotiation skills that can ultimately lead to better coverage and savings. By working with an agent, you gain access to a broader range of options and a partner who can help you navigate the complexities of medical malpractice insurance.
If you have questions or need advice on medical malpractice coverage, don’t hesitate to reach out to our healthcare expert Drew Colwell (contact information below). Making an informed decision can make a significant difference in your coverage and costs. Being an educated and informed buyer pays dividends in the long run, ensuring that you are adequately protected and financially sound.
Drew Colwell is a commercial insurance agent and risk manager who specializes in working with nonprofit organizations, healthcare providers and other human service related businesses all over the US. His contact information is below.
Phone: 406-204-3666
Email: andrewc@wafdinsurance.com
LinkedIn: https://www.linkedin.com/in/drewcolwell/