We receive inquiries all the time from doctors who have received a premium increase on their medical malpractice insurance at their renewal date and do not understand why. They have had no claims or adverse events to explain an increase. So why do medical malpractice rates increase with no claims?

Why do medical malpractice rates increase with no claims?

Most medical malpractice policies are claims-made policies. These claims-made medical malpractice policies have a retroactive date, commonly referred to as the retro date. This is the date that the medical malpractice coverage originally went into effect.

Example: If you have a 9/01/07 retro date on a current policy, this means the insurer will cover you for any eligible claims made against you that were incurred from 9/01/07 going forward. If the claim is dated 8/30/07, the insurer will not cover it since it was before the retro date.

When the policy comes up for renewal on 9/1/09, the insurer will increase the malpractice premium since they are adding one more year of coverage to the retro date. The renewal will extend the coverage to 9/1/10, or from the retro date to the new expiration date (9/1/10) which is three years total. The insurance company will make this increase at the renewal until the coverage has completed its fifth year.

These increases are called step ups, and when the policy period has completed its fifth year, the policy is said to be a “mature” medical malpractice policy. When the policy matures, it will have no more step ups or annual premium increases. Beginning with the sixth year, the premium will not increase unless there is an adverse event, change in practice, or the insurance company seeks a company-wide rate increase.

(This not meant to interpret your coverage; always consult your policy for all questions about coverage. HCP National is a medical malpractice insurance brokerage in Orange County CA.)