No matter what, physicians must remember that quality malpractice insurance is never a substitute for superb medical care and risk management.
Best practices dictate that physicians protect themselves with a solid malpractice insurance plan. However, rates are not set across the board. According to medical journalist Keith Loria, malpractice insurance rates are affected by many factors, including location, claims history, and specialty. Therefore, pinpointing rate trends can be tricky, as they may rise or fall differently depending on the factors at play. For example, Argus Risk Advisors insurance agent Robert G. Koch, who works mainly in Michigan and New York, notes rising base rates in his territories. This has subsequently led to a rise in claim payouts and increased the severity of claims. While Koch adds that carriers remain optimistic that the market is stabilizing, factors like the aftermath of the COVID-19 pandemic and economics may delay leveling out. Ohio-based Wallace & Turner Insurance partner and insurance agent Otto Larson points out that, on average, 2023 brought a rise in medical malpractice rates between 5% and 15%. Larson credits this rise to changes in tort reform and inflation.
Nonetheless, not every state has experienced unstable, rising rates. According to Tennessee-based family physician Danielle Kelvas, MD, fewer malpractice claims and payouts have occurred over the past few years, with generally stable or even decreasing rates. Dr. Kelvas attributes this to many players, like better patient safety measures, an uptick in the employment of electronic health records, and new state laws that make filing malpractice suits more challenging.
There are many contributing factors when it comes to premiums. According to Matthew Dobish, healthcare national practice leader at Marsh McLennan, elements like specialty, prior history, and jurisdiction all play a role. Dobish likens it to “a balancing act between frequency and severity.” In particular, Dobish notes the rise in nuclear verdicts—colossal rewards that are affected by social inflation—due to the reopening of courts following the COVID-19 pandemic. What’s more, people should not discount the effect of social inflation on the underwriting process, adds Dobish.
While the unpredictability of insurance rates may prompt some physicians to feel most comfortable committing to the same malpractice insurance carrier until retirement, Koch suggests this may not be the most beneficial tactic. Not only does Koch recommend that physicians explore alternative carriers at least every three years, but he suggests that certain physician specialists should examine their choices yearly or every other year. Rates can undergo annual fluctuations, and it’s in a physician’s best interest to be aware of those changes. That said, Koch also reminds physicians that they should not switch policies without first factoring claims, tails, and retirement into the decision. Another option could be to try to negotiate rates with a physician’s present carrier.
Obtaining help from a reputable insurance broker who is up-to-date on the market in a given physician’s territory is also essential. Although changing carriers is not overly complicated, Koch notes that adjusting to new processes can prove challenging for some physicians. It’s not unusual for physicians to grow accustomed to a particular carrier’s process, so this may cause a small, albeit slow-lived and temporary, inconvenience in the transition.
According to Dobish, physicians are best off letting a qualified insurance broker handle the process of carrier shopping, thereby allowing physicians to stay keyed in on their patient-physician and employee-physician relationships. Specifically, Dobish suggests working with a broker who has in-depth knowledge of the healthcare industry instead of a broker whose only focus is medical malpractice. As such, a broker’s fee should weigh less in the equation if that broker has the knowledge required to represent a physician in their marketplace. This will ultimately yield the largest return. Dobish stresses the importance of physicians keeping all insurance portfolios current, not just medical malpractice. No matter what, physicians must remember that quality malpractice insurance is never a substitute for superb medical care and risk management.