What You Should Know About Your Malpractice Carrier
As I sit here and think about NORDIC’s history, it’s almost impossible to believe the company is now in its 25th year.
As I sit here and think about NORDIC’s history, it’s almost impossible to believe the company is now in its 25th year. NORDIC got its start when the WSDA approached Physicians Insurance, a highly successful physician-owned malpractice carrier in Washington State, to create a similar approach for insuring dentists. I remember those days well— we called it “dialing for dentists” — one step at a time, asking local dentists to support this fledgling company; their company.
As with their physician counterparts, dentists wanted a company that represented their unique needs, had dentists sitting on the Board and other committees addressing underwriting, claims and risk management issues. They wanted a company that represented them. Within a few short years, NORDIC became the largest single insurer of dentists in the state and remains so today. Today, NORDIC is partly owned by the WSDA.
In the past 25 years, we’ve seen carriers come and go. Some carriers entered the market with the intention of rapidly expanding their services or increasing their market share by offering their product at a significantly lower premium. We have seen other carriers willing to offer “too good to be true” premiums, but cut corners with the services they provided and ultimately couldn’t retain their customers.
I recently sat down with the WSDA News to talk about the things you should know before you make the choice to insure with a malpractice carrier — here’s the interview.
WSDA News - How important is it for the company to be local? And should it matter if carriers insure multiple professions besides dentists?
MS -Besides the obvious challenge of dealing with time zone differences if your carrier is in a different part of the country, another thing to consider is how familiar the carrier is with your community. Are their rates based on claims experience where you work or are they based on the dentists that they insure overall? Are they nearby if you have a claim or a catastrophic event and need the company’s immediate support? How rapidly do they respond and do you have direct access to skilled claims and risk management specialists?
And you should think about whether your carrier is focused solely on dentistry and the unique challenges that come with a practice or if they insure multiple professions and may not devote the time or resources to specialize in each one. Sometimes their policies can be “a one-size-fits-all” where they use the same policy for all of their insured professions. Clearly an architect’s liability exposure is going to be different than a dentist’s.
WSDA News - Should it be important to access the carrier directly if the dentist has a question?
MS -Absolutely! You should have the option of speaking with your agent or contacting the company directly if you have underwriting, claims or risk management questions. Or for any reason!
WSDA News - What should a dentist be aware of with regards to how a company settles or defends a claim?
MS -Some malpractice policies have restrictions regarding settlements, commonly referred to in the industry as a hammer clause. The company will tell you the coverage includes consent to settle but fails to advise you that if a dentist has an opportunity to settle a case and doesn’t, the dentist will be responsible for any money awarded in excess of the original settlement recommendation. Make sure you thoroughly understand the contract language. And remember those companies with the “too good to be true premiums”? Ask them if they’re only using the best trial lawyers who specialize in dental malpractice. Is the attorney specifically chosen for a case because they are the most qualified and experienced for that particular situation? Does the carrier restrict the number of days they’ll pay for trial? Does the carrier limit expenses they’ll pay or the number of expert witnesses available to counsel? Ask if they have the experienced staff to personally answer and address your phone calls. Do they provide free risk management presentations, advice, and materials? If a company is going to deeply cut price, chances are they’re making it up somewhere else.
WSDA News - How important is it to know the financial history and stability of a carrier?
MS -I mentioned earlier that companies come and go in this industry. Sometimes they go because they don’t make financially sound business decisions, leaving their insureds behind as collateral damage. Several years ago a Washington malpractice company decided to enter into a new market and slashed their premiums to become competitive. While they were successful in writing new business, the premiums they wrote were unrealistic and when they eventually started seeing claims activity, they didn’t have enough in reserves to properly manage or settle the claims. The company went into receivership and was taken over by the Insurance Commissioner’s office.
WSDA News - Why would this be a concern to a dentist? Can’t they just go to another carrier?
MS -During that situation, many doctors wanted to return to their original carriers, and the carriers were generally willing to accept the doctor’s application for coverage. However, in most cases the carriers were unwilling to provide Prior Acts coverage for the doctor’s exposure while insured with the company in receivership. This created a huge gap in coverage for the doctors. It not only created a problem while trying to find coverage with a viable company, it also created a gap in coverage when the insured wanted to retire and exercise their Extended Reporting Endorsement or “tail.” It’s that old adage: buyers beware! If it sounds too good to be true, it probably is.
WSDA News - What other things should dentists think about?
MS - Ask if your carrier is the endorsed carrier for your state dental association, your local component society or other associations that may endorse a carrier. When a dental association endorses a carrier, it’s typically because they believe the products and service offered are exemplary and beyond the average.
Talk to your colleagues about the experiences they’ve had with their carriers, both good and bad. Is it easy to reach the carrier with questions? How experienced is their claims staff and are they available to assist with concerns? Do they provide free, sound risk management advice and materials? How available are senior-level executives if the dentist wants to discuss an issue?
Your malpractice carrier is there to protect the most important professional thing you’ve worked hard for, your career. This is probably not the place to take a chance because you can save a few dollars. Place your confidence in a company that not only steps up to these questions, but is going to be around for another 50 or more years.
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