- Location- location, location, location, is what you think of regarding real estate prices. Did you know that location is also one of the primary factors in how much a physician pays in premium for malpractice insurance coverage? Because each State has their own unique laws regarding tort liability, premiums can vary greatly depending on the State and/or County you practice in. States that have passed meaningful Tort reform, such as California and Texas, have experienced some of the lowest malpractice insurance premiums in the country even with large population pools of physicians. Furthermore, each State has a required or recommended set of limits a physician’s coverage is suppose to carry on their policy. For example, Florida physicians typically carry $250,000/$750,000 limits while Illinois physicians carry a minimum of $1,000,000/$3,000,000 limits. Generally, the larger the limits you carry, the higher the premium will be.
- Specialty- Not surprisingly, higher-risk specialties are more likely to incur malpractice insurance claims, and thus, also will pay more in annual premiums. Obstetricians and most types of Surgeons fall into this category. Additionally, the claims tend to be more sever e in terms of damages/indemnity payments with higher-risk specialties. Individual specialty classifications are further broken down to No Surgery, Minor Surgery, or Major Surgery, depending on the nature of the practice.
- Claims History- Nearly all carriers will offer some type of loss-free or claims-free discounts. Each individual carrier’s discounts will vary, but most carriers will offer up to 20% discounts for favorable claims history. Most underwriters will only look at the last 10 years of a physician’s claim history, not taking into account claims older than 10 years. In addition to discounts, a physician’s claim history is also major factor in determining if an underwriter will accept or decline a physician’s application for coverage.
- Carrier Competition- Market competition is an economic principle that applies to malpractice insurance markets as well. Insurance companies compete amongst themselves for market share, profits, and volume in a particular state. Generally, carriers establish and set premium rates based on actuary analysis and with approval of the State’s Department of Insurance. However, sometimes carriers file for decreased premium rates in an effort to increase market share and volume of policy holders by offering lower priced policies than their competition. This is more common in States with many medical malpractice insurance carriers to choose from compared to State’s with only a few carriers whose rates are fairly similar.
- Hours worked- Whether you are Part-Time or Full-Time is also a significant factor in a physician’s premium. Typically, more than 20 hours per week on average is considered Full-Time and less than 20 hours per week on average is considered Part-Time. Depending on the carrier, part-time discounts range from 20-50%. It is important to note that some carriers will not offer Part-Time discounts for Surgical Classes.
For a no-cost, no-obligation quote on your medical malpractice insurance, please complete our quick quote form and a medical malpractice professional would be happy to assist you in obtaining cost-effective coverage for your practice.To contact the author, call 800-457-7790 and ask for Matt Thompson.