We get calls all the time from our physicians who have received mailers offering medical malpractice insurance at ridiculously low prices. There are all kinds of schemes for professional liability.  But you need to know what you are buying when you buy medical malpractice, and you need to be assured that the coverage will respond as expected when you have a claim.

What a consumer should require of their medical malpractice insurer:

• An “A” category ( A-, A, A+, A++) insurer per www.AMBEST.com   The higher the grade, the better.
• An insurance company admitted in your state, if possible, which means they are regulated by your state’s Department of Insurance.  They are usually part of a state-sponsored insolvency program, meaning if the insurance company goes out of business, you may still be able to receive recovery for a claim.*
• Policy wording that covers the physician’s practice.
• An insurer that has been doing medical malpractice for 10 years or more, which may demonstrate a commitment to stay in the market if times get tough.

(* Admitted is ideal and it is where physicians with non medical malpractice risk profiles are placed by HCP.  However, for doctors who are not acceptable to the Admitted medical malpractice insurance market, the Non Admitted medical malpractice insurance is still a fine coverage offering.  Some of the largest insurance companies in the country are Non Admitted.)

What you do not want to choose is a company that does not have the above qualities.  The most common alternative to the above are Risk Retention Groups or RRG’s. Risk retention groups are insureds that have banded together and formed a federally chartered insurance company to share risk with each other.  They are regulated by the federal government and are exempt from state regulation. Federal law requires that they be licensed in one state (state of domicile).

RRG’s have the following:

• A risk retention group, RRG raises capital from its policyholders.  It has no means to borrow or raise capital on its own.
• Policyholders can be accessed or charged more than their initial premium if the RRG needs more money to operate.
• An RRG can charge smaller premiums than the type of insurer mentioned earlier, because any time they loseWeight Exercise money as a company, their reserves are the your assets as the policyholder.  This is explicit under Federal law and the amount of assessment is unlimited.
• Groups may say that they are not assessable, but this may not be accurate.  If there is a lack of premium to pay losses:

Members may pay “voluntary assessments or payments” to cover premium shortages  or

The RRG will enter bankruptcy and a Federal bankruptcy judge will determine what assessment amount is needed.

(We have  encountered physicians who paid hundreds of thousands of dollars for many years because the RRG’s in which they participated  had gone bankrupt)

So, if you get a solicitation for a cheap medical malpractice insurance deal, call us so we can discuss reality. Medical Malpractice is never cheap, until you need it. Then it is a bargain. We are not against RRGs; many are good alternatives, but one has to be aware of their downsides if things go badly.

The above is a brief discussion of Medical Malpractice Insurance. HCP is not a law firm and the above does not constitute an interpretation of insurance coverage. HCP National is a California Medical Malpractice Insurance Company or Broker.  We specialize in all forms of medical malpractice including OB/GYN medical malpractice insurance, Surgeon medical malpractice insurance, and Medical Group medical malpractice insurance.