We recently conducted a survey of physician accounts new to our agency during the last 24 months and found that 67% were paying over 21% more than they should be. That is more than 2 out of every 3 physicians that were spending, on average, $7,550 more than they needed to.
As a physician your insurance plays a vital role in the success of your practice. Alternatively, it's possibly one of the costliest items to you every year. This is an excellent area to focus your energies. Any savings that you generate will find their way straight to your bottom line.
Hill & Hamilton has been insuring physicians and hospitals for more than 85 years, and during that time, we have experienced four major economic cycles. During these four cycles, insurance availability and pricing have varied widely. In the early 80's it was not uncommon to have insurance premiums triple in one year. Then in 1987, prices dropped so drastically that several physicians literally obtained their insurance for free for one year!
In 1999 we began our last major tightening in the insurance market place. Physicians' liability rates began a steady increase. Many companies pulled out of insuring physicians all together. This pricing correction was not as severe as the price increases and availability issues we had in the early 80's, but then 9/11 hit. This only exacerbated the premium increases we were dealing with. Property insurance, usually a very competitive item, rose to an all time high, especially for high profile locations.
We are currently seeing a moderation in pricing, ‘softening' in insurance lingo. The constant terror threat however, keeps property rates high. Fortunately, successful tort reform in Ohio has led a to steady premium decline over the past few years for physicians. With the slowing economy, insurance companies will likely continue to decrease liability rates in order to gain market share.
Over the next 2-3 years it is our prediction that rates will continue a downward slide of 10-15% annually for certain classes of physicians and for those that properly prepare for their insurance renewal. This of course is predicated on several factors such as tort reform being upheld in Ohio and having no major terror attack on US soil, to name a few.
Enough said on our predictions. You can do a great deal, regardless of the current cycle, to consistently maintain proper coverage at the most competitive premiums. Here is our step by step process to secure your financial insurance future. If you follow these steps we guarantee you will see positive results in your insurance program.
Step #1
120 Day Rule: Start this process early. Gather up your insurance policies approximately 120 days prior to your renewal date. Generally speaking you should try to keep your policies and related endorsements for at least five years. This is especially important if you have changed carriers.
WARNING: Check with your agent regarding the agency's level of duplication and redundancy of their records. Most agencies are paperless and rely entirely on their computer system to maintain your data. Most agencies hire a service to back up their system daily. All the data is then stored in a secure location and monitored for restorability. Do not rely on the insurance company for this data; your agent must securely maintain this data.
Step #2
One Renewal Date: Try to have all your insurance policies renew on the same date. This will make it much easier for you to monitor and while it might be a hassle the first time you make this change, you will be glad you did. If you are concerned about a large deposit because all policies renew on the same date, don't be. Most insurance companies, if asked, will allow for some type of installment plan.
WARNING: Most agents don't want to do this because it is a lot of work for their staff but getting all policies renewing on the same date places you in a great position to get the best price and best coverage.
Step #3
Call your agent: Now that you have your policies together and have set a renewal date 120 days in advance, call your agent. First, tell your agent to bring a summary of your current coverage and a list of all your policies, premiums, policy numbers and expiration dates. Also ask your agent to obtain loss runs from all insurance companies that you have had during the last ten years. Tell him/her you need the loss runs on the insurance company letterhead and that these be currently valued. That means they are fresh from the company, not copies of loss runs that were obtained last year - this is vital. Now this should take no longer than two weeks so set your appointment with your agent accordingly.
WARNING: Current valued loss runs are critical; no insurance company will look at your insurance without them. Even if you have had no losses, get current valued loss runs from all carriers
Step #4
Meeting with your agent: If you started this process at 120 days prior to your renewal date this meeting is taking place better than 90 days prior to the renewal - good timing. Before we go into the particulars of this meeting, have a discussion with your agent about your overall practice. It amazes us how often a physician is overcharged due to misinformation, or even worse, not adequately protected because of policy exclusions. Generally, in most cases the insurance company did not fully understand what was going on with the particular physician. This usually happens through misinformation from the agent or lack thereof. If you have had other agents quote your insurance in the past, it is likely one insurance company could have information from several different insurance agents. It is very possible that some of this information is outdated or incorrect.
Ok, here are some particulars...
-
Make sure you get quotes for several options. Often, the annual premium for limits of $1,000,000/$3,000,000 is very similar to the cost of $2,000,000/$4,000,000 limits.
- It's vitally important that your agent determine the correct classification for your practice. This ensures your premium is appropriately correlated with your risk and that you are properly protected.
- If your current coverage is on a claims-made form, make sure the optional quotes preserve your retroactive date. Otherwise, you could be paying a tail premium and they're often very expensive.
- Check the financial strength of the companies you're considering. It may sound overly cautious, but if the insurance company isn't financially sound, how will they pay legitimate claims?
- Discuss the different payment options available with the companies you're considering. Some insurance companies charge extremely high interest for installment plans.
At this meeting you will be able to tell if you have the right agent. He or she will come prepared and ready to suggest worthwhile alternatives to reduce your insurance cost and provide recommendations for reducing or completely eliminating the risk of loss - in insurance lingo we call it ‘reducing the cost of risk'.
Insurance is only part of the solution. Risk management and risk avoidance also play a part. Whether you are a large or small practice there are valuable alternatives to reducing your cost of risk.
Step #5
30 Day Rule: To get an insurance company to give you their best offer, you need to have your complete submission to the insurance companies no later than 30 days prior your renewal date. Follow up with your agent and make sure your submission gets to the insurance company in a timely manner.
WARNING: This is where most agents drop the ball. Procrastination sets in and delays occur. A good agent sends out a complete submission 30 days prior to the renewal date.
Step #6
Proposal Time: Ask your agent to keep it simple and in a form that you can understand. Remember this is about getting the best deal for your practice, not about the volume commitments the agent has with one of his or her insurance companies. Discuss optional coverage and use the agent's expertise to recommend the best choice, even if it is not the lowest premium. There could be differences in coverage. This is where his or her product knowledge, market savvy and familiarity with you and your practice will show itself.
Step #7
Take a deep breath: Finally, get the check book out and take a deep breath. The insurance company will make good on their promise as long as they know they are dealing with a tough, smart and aggressive insurance agent. Negotiate the best payment plan that you can. Seldom will full payment in advance get a discount. Keep in mind the premium you are paying the insurance company is actually carried on their books as a liability. As the policy period rolls out they recognize the premium as their own.
Conclusion
By no means is this a complete laundry list of items needed to properly arrange a proposal for you and your malpractice insurance. Rather, it's a guide to get you started. Your alternative is to rely on the insurance company to competitively price your coverage year in and year out - not recommended!
Simply stated, be a smart consumer but don't try to be your "own agent. Protection for you and your practice requires constant vigilance and a partnership between you and your professional agent. For the latest information on how to get the best protection for yourself and your practice, call Hill & Hamilton - (877) 592-9076.
Hill & Hamilton Insurance and Financial Services has been protecting the financial future and reputation of Ohio physicians since its founding in 1920. Specializing in the medical malpractice industry, the licensed advisors are dedicated to helping physicians and hospitals structure insurance programs that will provide the right protection at the best price.
Hill & Hamilton is proud to provide this free report to you as part of our continuous effort to offer Ohio physicians information pertinent to their insurance protection. Our hope is that this information will help you secure the protection you deserve and require while minimizing your cost for this protection.
If you have questions or concerns relating to your malpractice insurance, please contact Matt Simon at Hill & Hamilton Insurance - (877) 592-9076.