Good News for the Malpractice Insurance Market

By Matt Gracey
November 2008

As we move forward into the second half of 2008, we find the Florida malpractice insurance marketplace continuing to improve with rates decreasing and underwriting requirements loosening. There are many factors leading to this, but the most important one is that the number of claims against Florida doctors has continued to decrease dramatically after the 2003 tort reforms.

Misleading marketing tactics are on the rise

Another sign that the market has improved is the increased number of marketing solicitations we are seeing that promise you everything. Many of our clients receive flyers that suggest artificially low malpractice rates to get your attention. What they may not tell you is their strength, experience, or overall ability to stay in the market over the long run. Remember that your malpractice insurance coverage is, in essence, a “promise to pay” unlimited legal fees and/or your liability limits to resolve a lawsuit that may take many years from now to resolve. If the insurance company is no longer solvent then your case and your financial position can be severely compromised. You can also lose the ability to buy retroactive coverage to switch back to a standard carrier. If you must purchase tail coverage because your carrier has failed, this is throwing away good money. The new smaller insurers can only compete with the large standard insurers by charging artificially low premium rates. Any significant drop in price should raise many questions and concerns in this market.

The myth of reinsurance

The new insurers to Florida can claim that they carry reinsurance to cover them for any losses that may exceed their reserve threshold. However, there are two serious problems to consider when relying on reinsurance to satisfy the issue of carrier experience and strength. One is that all reinsurance policies have exclusions such as “bad faith” claims against the insurer. In Florida, this can amount to tens of millions of dollars that can wipe out a new, financially fragile insurer. The second issue with reinsurance concerns the insurer’s overall claim experience. If a new insurer has a bad year or two with high claims payouts, then their reinsurance premium will increase substantially to cover the costs. This is no different when a physician has serious claim issues and either the premium will greatly increase or the policy cannot be renewed. If a new carrier loses the benefit of reinsurance, then this can have devastating implications for the solvency of the insurer and ultimately on the viability of your coverage. The large asset base of the standard insurers allows them to easily weather these ups and downs in the reinsurance market.

Malpractice insurance experts

We at Danna-Gracey are malpractice specialists who work on behalf of physician policyholders throughout the state. We can shop and analyze the various options available to you from many insurers in the Florida marketplace. It is our job to match the best coverage options for your practice with the best competitive premium rates. As insurance experts, we recommend the specific coverage options that match your practice profile. If an insurance company is having trouble with their financial or management conditions, then we will advise you of these details so that you can make an informed choice regarding to your malpractice coverage. As one of the largest independent brokers in Florida specializing in malpractice insurance, our agency never charges a fee to provide this valuable service to our physician clients. Because of our many years of experience, doctors trust us to recommend the very best malpractice coverage in the ever changing insurance marketplace.