The old adage holds true: a person who represents themself in a legal battle has a fool for a client. The same applies to purchasing medical malpractice insurance. Unless you want to spend years learning insurance brokering, it is best to consult an expert medical malpractice broker.
A good broker can shop your insurance to make sure you have the best deal. They can be an advocate with your insurer if you have issues with them. They also can explain how your coverage works.
The challenge is how to find an expert broker in medical malpractice insurance, especially in crowded markets like California. You need to find someone who is ethical and will look out for your interests.
I wish our prospects could sit in our office for a week and see how hard all of us, at HCP National, work to do the right thing for our clients – because there are many competitors who do not.
If you are wondering if or why you need an insurance agent for your medical malpractice policy, then read on. This article covers everything you need to know about working with brokers- from how to find a good medical malpractice broker, how much brokers cost, and how to ensure you are getting the best deal.
How to find a good medical malpractice broker:
First, you should always ask your colleagues who they use and recommend. You can also keep your eye out for any marketing material you receive from brokers.
Once you are considering working with a specific broker, you should ask the broker for the names and phone numbers of their representatives at these insurance companies: NORCAL, MedPro, Coverys, or Aspen American. Call the representatives to confirm that the broker is appointed with the insurer. This is a good indication that the broker places a lot of medical malpractice policies and that they have been vetted by these insurers.
Note: The Doctors Company (TDC) is not mentioned above, since they appoint very few agents, and those who are appointed are often direct writers (meaning they can only place clients with TDC). So the fact that the broker does not have an appointment with TDC does not indicate that he/she is not an expert in medical malpractice insurance. A non-appointed broker can still give you a TDC quote through an intermediary.
Once you have spoken with the insurance companies’ representatives, ask the broker how many clients he/she has currently. You want to work with a broker who has 50 or more clients; this is a good indication of the broker’s expertise. Then, ask the broker to list all of the insurers that they can go to on your behalf.
How much does an insurance broker cost?
Medical malpractice brokers are all paid the same commission, which is typically 10% (but in some cases 15% to 20%) of the total premium. Brokers’ commissions are built into the price of the insurance, and thus, having a broker costs you nothing directly.
In addition, if you decide not to use a broker and go directly to an insurer instead, the insurer will not reduce the premium by the broker commission, since it is built into the price.
Again, having a broker does not cost you anything.
How do I know my med mal broker is doing the right thing by me?
Standard vs. non-standard insurance
Generally speaking, “standard” insurers offer the best terms and the lowest prices. If you are already insured in the standard market (with TDC, NORCAL, MedPro, Aspen American, or Coverys), then you have access to the lowest premiums and the best terms. So in most cases, there is no reason for your med mal broker to shop for your insurance coverage.
On the other hand, if you are in the “non-standard” insurance market, then your broker should shop for your insurance coverage every year, as well as try to help you re-apply into the standard market with the hope that it will accept you.
Assuming you are in the expensive, non-standard market, you want your broker to go to at least 5 to 8 insurers. You want a list of the responses – and quotes, if applicable. Also, if you want proof of inquiries, you can ask for evidence, like emails or letters that the broker received from the underwriter or intermediary.
Always check the fine print
Review each quote to ensure your medical specialty is listed and your retroactive date is included. Sometimes, underhanded brokers will sell medical malpractice coverage without a retroactive date – and you will not know until it is too late. (Example: A client left us for a new broker and a seemingly cheaper deal, as a result of the new broker removing the client’s 2004 retroactive date. Unfortunately for this client, any patient harmed in his care prior to the effective date of the new, cheaper policy can sue the doctor at any time, for a past event, and the doctor will not be covered at all.)
Next, look at the fees that you are charged. Brokers are permitted to charge fees, but they must identify them as broker fees. Broker fees are standard and generally range from $350 to $500. However, we have encountered a competitor broker who charges not only the usual fee, but also numerous other fees, and calls them “processing fees”, “policy fees”, et al. This broker received the normal 10% commission, plus multiple extra broker fees disguised as something else, running away with 30-50% commission (which is obscene and disgraceful to our profession). If you notice any extra fees, inquire about them. If the broker does not give you valid reasons for the charges, find a new broker.
Avoid brokers who recommend RRGs
Watch out for brokers offering Risk Retention Groups (RRGs). Joining an RRG means you become part of a self-insured deal.
Some brokers will say that RRGs have reinsurance and other items of security, but in reality, if your RRG runs into financial problems, it can come back and ask you for more money – sometimes, more than the premium that you paid initially – and you will have to pay as much as they need. (Example: Before engaging us as their broker, one of our clients joined an RRG. Unfortunately, they went bankrupt and had to pay the RRG over $250,000, including legal fees.)
If you come across brokers who offer this option and do not tell you the truth about the downside of an RRG… run! Buy your medical malpractice policy from a real insurance company, where you pay your premiums and that is all you owe.
Put your trust in an experienced broker. Since 1994, we have been helping medical professionals like you find the best coverage at the lowest possible price. Please contact HCP National now to get a quote for your medical malpractice insurance.
Do I need more than one broker?
If all the above criteria are met, then no, you do not need more than one broker. Allow the broker, who is doing the right thing, to do their job, and you will develop a relationship with that broker. If your broker does not meet these criteria, then find a new broker.
How to engage a second broker
If you want more than one broker to bid for your insurance, then choose two. Have this outside broker shop 30 days prior to your renewal date, but not any sooner. If your current broker is truly shopping your insurance, then they should have started 30 days prior to your renewal date. The insurance companies release quotes to the first person who submits your risk to them. Those who come later are denied access.
If your broker is doing their job, this outside broker should be denied a quote. When this happens, the outside broker may call you asking for a broker of record letter, which is a signed document from the insured stating that a broker or agent is representing the insured. Do not grant this!
Conversely, if your current broker finds they cannot access all of the insurers they went to, and if they come asking you for a signed broker of record letter, do not grant this either! If your current broker did their job properly, then they should have submitted your risk to all of the insurers prior to the 30 days.
You may also receive a call from either broker, saying that it’s bad to have another broker (all sales talk). You will get calls saying, “I am blocked” (not a lack of fiber). It means your current broker or the outside one did the job properly, therefore, do not undermine them by issuing a broker of record letter.
The ethical code of using a second broker
If a broker brings you a bid that they put hours of work into obtaining without any compensation (since brokers do not get paid until they get your order to place the coverage), then please do not give their quote to someone else. This is not a good business practice, nor is it ethical. We all have families to support and businesses to run.
This is a small market, thus you will get a bad reputation for doing this, and no reputable brokers will work with you again.
Do you need a medical malpractice insurance broker?
If you want to make sure your risks are covered with the best possible terms, at the lowest possible price, then you need to work with an insurance agent.
Founded in 1994, HCP National Insurance Services, Inc. is an independent, privately held commercial insurance brokerage, serving clients nationwide. HCP Is also one of the largest brokerages in the country that is led and owned by a certified minority (MBE) woman (WBENC).
At HCP National, our number one goal is to help you decrease your costs and improve your coverage. We built our insurance brokerage by helping our clients identify areas where they can save money, while keeping their organization fully covered.
If you are ready to save money on your insurance, please contact us today for a quote.
HCP National is not a law firm and does not provide legal advice. We are a medical malpractice insurance broker and risk manager.
