Wondering why your medical malpractice insurance rate increased? You’re not alone. Read below for 4 possible reasons why your insurance rate is now more expensive.
#1 Overall Market Conditions at the Macro-level
Doctors’ medical malpractice insurance rates are rising in 2021 due to increasing healthcare liability defense costs and larger indemnity payments. Even if you have a clear record of no claims, you can expect a modest increase in your premium due to the nature of insurance – a pool of money where few users actually incur costs, but there must be money available to defend all policyholders. Solvency is important, and carriers sometimes must do what is responsible – offsetting losses by collecting more premium, even if it is not a popular choice. With rising defense costs, the carriers must remain stable in the long-term by collecting more premium via higher rates for everyone. For example, a doctor with no claims might see a rate increase of 10% whereas a doctor with recent malpractice claim payment might see their rate go up by 50% or more.
#2 Claims-made Insurance Rates Step-up as They Mature
If you are a physician covered by a claims-made medical malpractice insurance program (as most are), you can expect your rate to start relatively low, and increase annually, often over a 5-year period. For example, you might start out paying $5,000 in the first year, then $10,000 in year 2, then $14,000 in year 3, $17,000 in year 4, and $19,000 in year 5. These annual “step-ups” occur because the period of time being covered by the insurance carrier grows. During the first year of the “step-up period” you are only needing coverage for the potential lawsuits which could occur in the prospective 12 months of the new policy. At your first anniversary, your carrier will offer a renewal quote that includes retroactive coverage for 12 months, plus they must account for potential malpractice exposure for the prospective 12 months. At your second policy anniversary (entering third year), the retroactive coverage period is two years back, plus the one ahead. Once your policy becomes “mature,” you will no longer have annual planned increases, but you are still subject to overall market conditions.
#3 You Reported a New Claim or Had a Payout in the Recent Past
If you have had a malpractice indemnity payment in the past five years, your rate will likely increase more significantly than someone with no claims in recent years. Claims history is a major factor in determining the rate you pay for the insurance protections of your policy. The legal costs of defending your claim have an impact on your rate. Most carriers will appoint a strong attorney to defend you, and the costs of defending claims is rising. Even if you have never had a claim pay out indemnity, your rate can increase in response to open claims.
#4 Your Practice Profile Has Changed
Did you start doing a new procedure, or did your practice volume increase? Medical malpractice insurance rates are determined based on many factors including the types of medical care rendered, the location of the practice, and some underwriters include a metric for the number of patient visits. If your practice doubled patient visits and revenue, that’s great, but it also means the potential for a claim his increased significantly, thus your carrier may need to balance the risk with a higher premium.
If You’re Still Wondering Why Your Medical Malpractice Insurance Rate Increased
If you are a doctor, surgeon, or any other type of medical professional who has seen your liability insurance rate go up, contact MEDPLI. Our independent brokers can review your situation to determine why your medical malpractice insurance rate increased and review your options to make sure you have the best coverage available from the top carriers in the market.