How to Choose a Liability Insurer
This column is provided as a service to the membership by the Psychiatrists’ Purchasing Group Inc. (PPG), operator of the APA-sponsored Professional Liability Insurance Program.
Q I am in my final year of residency, and I am researching professional liability insurance. What criteria should I use to evaluate the stability of an insurance company, and what other factors should I consider prior to my decision?
A One way an insurance company’s financial stability can be evaluated is through its A.M. Best rating. A.M. Best is the oldest, most experienced rating agency in the world, and it assigns a rating to a company only after an extensive quantitative and qualitative evaluation of the company’s financial condition and operating performance. An "A" rating is assigned to those companies that, in its opinion, have achieved an excellent overall performance when compared with property/casualty insurance industry norms.
This rating is important because hospital bylaws or participation agreements with managed care organizations often require attending physicians to carry malpractice insurance with a specific A.M. Best rating or better. Typically, the minimum acceptable rating is A-, but you should check with your own hospital or managed care organization. If you have coverage with a carrier whose rating is downgraded by A.M. Best, you may be notified by the hospital risk manager that your coverage is no longer acceptable under the bylaws. In this case, you will need to find coverage acceptable to your hospital.
The APA-sponsored Professional Liability Insurance Program’s carrier is Legion Insurance Company. Legion is rated "A Excellent" by A.M. Best. Insurers with an A rating generally have demonstrated a strong ability to meet their respective policyholder and other contractual obligations. You can obtain the A.M. Best ratings from your public library or on the Web at <www.ambest.com>.
Another important consideration is to determine how long the insurance company has offered professional liability in your geographic area. Some carriers have a history of ceasing coverage in specific areas if they fear a lack of profit or bad losses. A stable insurance company shows a commitment by providing coverage during the hard and soft markets in the professional liability insurance industry.
We also suggest that you develop a list of questions regarding the features and benefits of each insurance company you are considering. These questions should be on your list:
• What is the insurance company’s A.M. Best rating? Has it recently changed?
• What are the dollar limits of the coverage?
• What risk management materials and activities are included as a benefit of coverage?
• Does the insurance company have psychiatric medical malpractice expertise?
• How accessible and knowledgeable are the claims staff and defense attorneys?
• What exclusions or surcharges exist?
• What payment plans are available?
Purchasing professional liability insurance is one of the most important practice decisions you will make. To assist you, the APA-sponsored Professional Liability Insurance Program has developed a convenient checklist to guide you through your decision-making process.
If you would like to receive a "Before You Sign" checklist, call (800) 245-3333, ext. 389, or contact TheProgram@apa-plip.com. A checklist and other program information are also available at <www.apa-plip.com>.
APA welcomes the opportunity to hear from you about APA-sponsored benefit programs. Send your questions on the APA insurance and special benefit programs to At Your Service, Psychiatric News, APA, 1000 Wilson Boulevard, Arlington, Va. 22209-3901.