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St. Louis Metropolitan Medical Society

The Greater St. Louis Medical Group Management Association

is pleased to launch a partnership with the

St. Louis Metropolitan Medical Society (SLMMS).  

This partnership will feature the sharing of information

in publications and on our websites.  


Thanks to Monte Shields for sharing the following article.


Prepare for Changes in the Medical Malpractice Insurance Market

Higher costs and fewer discounts began in late 2019 as carriers have experience larger claims expense


By Monte Shields

 

Physicians and practice administrators need to prepare for the inevitable increase in medical malpractice insurance premiums at the next renewal.  Many practices have already experienced the increases, and there are more on the way.  The medical malpractice insurance market is changing, and premiums are going up. 

 

Physicians, hospitals, facilities, and other healthcare provider groups have enjoyed a little over a decade of steadily decreasing malpractice insurance premiums.  The medical malpractice insurance market is cyclical, and mid-way through 2018 it reached the bottom of the “soft market,” making 2019 the beginning of a new cycle.  This new “hard market” may not be as severe as in past decades, but the signs that it is coming are prominent: Increasing frequency of severe claims, rising rates due to higher loss ratios, fewer discounts available, tighter underwriting guidelines, and smaller less stable insurance carriers collapsing or being acquired.

 

Practical steps to help prepare your practice:

 

  • Consider all the options and get quotes from all available medical malpractice insurance carriers.
    • Getting multiple quotes can be a lot of work, but it will mean making a more educated decision based on all the data.If you don’t have time to solicit quotes on your own, work with a broker who will submit your applications to all or most carriers and get quotes back to compare side-by-side.Then you or your group can make an educated decision based on the cost and financial stability of each company.

       

    • Agents and brokers have relationships with the malpractice insurance carrier’s underwriters, which means they can negotiate on your behalf to get you the best coverage at the best rate.Work closely with your agent or broker and make sure you are getting all the discounts you qualify for and have the correct rating for your specialty and practice.

       

    • Take advantage of the risk management credits available by taking the courses the insurance company offers.There is usually a 5% discount for courses that are helpful and in most cases available online.

       

  • Choose a financially solid, quality malpractice insurance carrier with plenty of capital.
    • In the last 3 years more than a few small, regional, unrated malpractice insurance carriers have failed, leaving physicians and groups in a difficult spot and in some cases without coverage.While these companies were drying up, practice administrators and doctors were scrambling to find new coverage or replace tail coverage that had been purchased or earned after retirement.

       

    • Don’t wait!  Do some research on your current insurance carrier.If they are not A-rated, with a sizable market share and a solid historical record it’s worth asking some questions and maybe even shopping around.Better yet, speak with a broker, agent, or consultant about the financial stability of the carriers available in your area and specialty.

       

    • Ask key questions about the company that covers your practice:
      • What is the total annual premium?
      • How much money is in reserve to pay claims – current and future claims?
      • What is the current loss ratio?Has it changed in the last 3 – 5 years?
      • How much money is in surplus?
      • How long has the company been in the malpractice insurance market?
      • What are the historical rate trends with the company?
      • What is the company’s long-term strategy?
      • How do all of these factors compare to the other carriers available?

         

    • Again, keep in mind that rather than doing this research yourself you can speak with a broker or agent that should be able to provide you with this information and more for any carriers you might want to consider.

       

  • Budget for a premium increase at renewal time.
    • At budget time, include an increase of 15% -- 20% in your practice’s medical malpractice insurance expense category.Not everyone will see rate increases this high, but most will see an increase.

     

    • Most medical malpractice insurance carriers are preparing for the change in the market.You should too.According to one of the largest malpractice insurance companies in the nation, the combined loss ratio of all malpractice insurance carriers from 2006 through 2015 was below 100 percent.But in 2016 that same combined loss ratio rose above 100 percent and has continued to increase since.That means carriers are paying out more than they’re collecting in premiums, which is eroding their surplus and reserves.There will be a reaction to this trend in the form of higher premiums.Some carriers may hold out for another year or so, but the increases are on the horizon.

     

    • In 2019 most of the larger carriers pushed rates up by offering fewer discounts and filing higher rates in some states and in some specialties.The increases range from 1% to 30% depending on the state, specialty, and loss history.

     

    • As indicated above don’t forget that cost increases to customers may not take the form of direct premium increases, at least not at first, so make sure that you are asking about and paying attention to things like dropped or reduced discounts, higher deductibles, lower or no dividends returned, or reduced risk management

       

  • Manage the group’s expectations.
    • Whether you’re a doctor, a practice manager, or a hospital administrator, if you’re one of the decision makers prepare others in the group for the changes ahead.  We’ve all enjoyed a decade or more of low rates and few claims.Since 2009, most practices have reported that medical malpractice insurance cost is not one of their main concerns or highest expenses.About 15 – 20 years ago malpractice insurance was one of the largest expenses involved in practicing medicine, but as rates consistently decreased over the last 10 – 12 years, most practices haven’t even thought about it as a hot button issue.That is changing.Help your group understand what’s changing, why it’s changing, and what to expect in the next few years.And if you have questions yourself find a broker or agent that you trust that can answer your questions and that is willing to answer those of your colleagues, coworkers, or bosses as well.

 

What is pushing the change?

 

The main reason for the change in the medical malpractice insurance market is the increase in the number of large payouts and the severity of those payouts.  Additionally, there has been a shift from an abundance of independent solo or small physician groups to larger groups and hospital employment.  In order to attract new clients and gain market share in this more competitive environment malpractice insurance carriers have been consistently reducing rates.  While they’ve remained profitable for many years, the profits have been minimal for the last 3 years, and many carriers are beginning to see reserves eroding.  If combined loss ratios continue above 100 percent, an adjustment will be necessary to keep the carriers solvent.  As we’ve mentioned above, this has already started taking place as of late 2019.

 

The cyclical nature of the medical malpractice insurance market means that there will always be ups and downs, or “soft” and “hard” market trends.  Insurance professionals agree that the recent soft market cycle lasted longer than expected, and longer than has been typical historically and physicians, groups, and hospitals have all benefited from lower rates and less risk for over a decade now.  But as with any cyclical business market, things are never static but always changing.

Physicians and administrators need to be ready for these changes as they plan for this year’s medical malpractice insurance renewal.


--------------------------

Monte Shields is the manager of agency 

marketing at The Keane Insurance Group, Inc.

He can be reached at monte.shields@keanegroup.com.

 

 


The following articles also appeared in the

St. Louis Metropolitan Medical Society's newsletter:

 

 

 

Prepare for Changes in the Medical Malpractice Insurance Market by Monte Shields, Keane Insurance Group, Inc.

 

The Budding Friendship of HIPAA and Virtual Assistants by Kevin K. Peek and Killian R. Walsh

 

Prevention Is the Best Medicine: Taking A Proactive Approach to Your Medical Practice’s Cybersecurity by Ryan Haislar, Computerease

 

Help Wanted on the Dark Web by Derrick Weisbrod, Healthcare Technology Advisors

Take Two and (Video) Call Me in the Morning by Kevin K. Peek, Sandberg Phoenix & von Gontard P.C.

Leaders - Born or Made? by Julie Guethler, Transform Healthcare Strategies

Health Care Innovation in St. Louis by Melony Tanko, Kypher and Michael Tan, Kypher Intern

Navigating MIPS in 2018 by Derrick Weisbrod, Greater St. Louis MGMA Director at Large

Surviving the Stress: Malpractice Risk Reduction by Diane Robben, Greater St. Louis MGMA VP Business Partners

View from the Inside by Kathleen McCarry, Greater St. Louis MGMA VP Advocacy

Filling the Gap: How Physicians and Aspiring Medical Students Learn from Each Other by Julie Guethler, Greater St. Louis MGMA Past President

What the "Soft Market" Means for Physicians by Monte Shields, The Keane Insurance Group

A Tale of Two Practices by Julie Guethler, MGMA of Greater St. Louis President

Physicians Beware of Referrals for Home Care and Potential Fraud Charges by Diane Robben, JD, MGMA of Greater St. Louis VP Business Partners and Denise Bloch, JD

MGMA of Greater St. Louis: Committed to Developing Strong Practice Managers by John Marshall, MGMA of Greater St. Louis Director at Large

Finding Good Employees by Chris Keefe, CPA, CMPE, MGMA of Greater St. Louis President-Elect

Workplace Wellness: Start Small to Improve the Health of Your Employees  by Chris Keefe, MGMA of Greater St. Louis President-Elect

Carrots and Sticks in Coding: Why Good Documentation Matters by Kathleen McCarry, MGMA of Greater St. Louis VP Advocacy

 Introduction to MGMA: Can Your Practice Afford to be "Left in the Cold?"  by Jim Kidd, MGMA of Greater St. Louis President

 

Contact:

Greater St. Louis MGMA
314-499-9344
PO Box 16012, St. Louis, MO 63105