Malpractice Insurance
There's no doubt of the importance and security of malpractice insurance in your professional life. But in recent years, there has been some confusion over what kind of coverage is best: occurrence or claims-made. Medical Staffing Network makes things clear by offering claims-made insurance with tail coverage. Here's why.

An occurrence policy is one that covers you for a specific dollar amount for each individual year. For example, if you carry an occurrence policy for $100,000/$300,000 in 1998 and a patient you had that year files a claim against you in 2003 when you have a $1 million/$3 million policy, the insurance company is liable for no more than $100,000 for that particular claim. So, if you're successfully sued for $250,000, you'll be personally responsible for the $150,000 beyond your coverage.

Frequently, years can go by before a patient files a claim. And after five years or so, $100,000 might not be enough coverage to cover the entire claim. Despite inflation, rising awards from judges and juries, and the increasing amount of money attorneys are asking for in lawsuits, the insurance company is still only responsible for the limits you carried at the time the incident occurred, not when the claim was made.

In addition, under an occurrence policy, physicians pay premiums that take into account not only current experience, but future projections as well. Such claims are called "incurred but not reported" (IBNR). Occurrence insurance rates can vary significantly because of the difficulty in projecting future claims expenses.

Here's why a claims-made policy can be a better choice. Let's take the same example above, but this time, let's assume you had a claims-made policy. If you carried a $100,000/$300,000 policy in 1998 and get sued in 2003 when you have a $1 million/$3 million policy, the insurance company is now liable for $1 million for that particular claim.

This is because a claims-made policy can cover you for the policy amount you have when the claim is made. This is an advantage for you because every time you increase your policy limits, you can have past unclaimed acts retroactively covered for the higher limits, keeping pace with inflation and rising awards.

Claims-made policy premiums are relatively low for the first few years because there is often a significant lag between when a treatment is administered and the filing of a claim resulting from that treatment. Because of this, claims-made premiums are structured to increase each year that the coverage is in continuous force until the risk presented approximates a "mature" risk. This is usually in years 5, 6, or 7 for individual physicians.

As a result, one advantage of claims-made coverage is that premiums are based on actual past and current experience. Policyholders therefore do not pay premiums for future liability that is difficult to project.

One advantage of an occurrence policy is that it covers you even if a claim is made after you terminate coverage, whereas claims-made policies only cover you for as long as your policy is in effect. This is where tail coverage comes into play.

Tail coverage (also called extended-reporting coverage) is what covers a practitioner from the time he or she drops their claims-made policy (usually after they retire) to the day they pass away. Medical Staffing Network offers and pays for tail coverage to protect you in the event a patient sues after you no longer have malpractice insurance.

Like the claims-made policy itself, the price of the "tail" is determined by a practitioner's specialty, territory, and limits of liability, as well as the length of continuous claims-made coverage with the company. It makes sense that the further back in time the "Tail" must reach, the greater the liability assumed by the company and, therefore, the more expensive it is for the insured to purchase.

It's important to remember that you do not have to buy tail coverage every time you switch companies. Prior-acts coverage is the same as tail-coverage, except you obtain it from the company you're switching to. If you switch to a program with prior-acts coverage, you do not have to buy tail-coverage from your old company. The only time you would need to purchase tail coverage is when you stop practicing, or you change policies and prior-acts coverage is not available.

If a practitioner is covered under Medical Staffing Network's malpractice policy and a tail policy becomes necessary, MSN will be responsible for its purchase, not the practitioner.

If you have any questions regarding either type of malpractice insurance and how it applies to your individual situation as a Medical Staffing Network anesthesiologist or CRNA, please feel free to contact us.