Non-standard physician malpractice insurance is a difficult line of business in the best of times. Proper placement of this complicated and volatile class of business in the depths of a soft market cycle presents even greater challenges.
Here are three things you need to know today about placing non-standard physician malpractice insurance:
1. Not Understanding The Entire Risk Profile Puts YOU At Risk
At the bottom of a soft market cycle, where I believe we find ourselves today, the number of non-standard physician risks is a small fraction of those that can be found at the height of a hard market. Why is this something you need to know? Because it means those physicians that are considered non-standard risks today are truly non-standard, and as such their entire risk profile can be extremely difficult to nail down.
Non-standard physicians are not just those with substantial claim activity. My experience has taught me the list of reasons a physician might be a non-standard risk is a mile long. Yet they all have one thing in common: each makes proper placement of malpractice insurance more difficult. You must thoroughly understand the overall risk profile of a non-standard physician in order to place it properly. That takes information and communication. If you fall short in your understanding of the overall risk profile you will not only do your client a disservice but open yourself up to potentially enormous E&O exposure as well.
2. Coverage Terms Will Impact The Transition From Non-Standard To Standard
Something that is typically lost on generalist wholesalers is the fact that the coverage terms secured for your physician client in the non-standard arena are a critical element in the success or failure to subsequently placing that risk with a standard physician writer. Generally speaking, the closer the terms and conditions are to standard physician products the greater the chance of successfully making the transition. Of course, you’ll need to be aware of the terms and conditions typically provided by standard physician products in order to know what to ask for. Access to standard physician writers helps too.
The hard market is coming. If you have a non-standard physician client you must get him/her into the standard market as soon as possible in order to secure significantly enhanced coverage terms and more affordable premiums. Once the market begins to harden you will have missed your chance.
3.Risk Retention Groups (RRG’s) Are Not A Good Choice In A Soft Market
I’ll allow for the possibility that there is a place for RRG’s near the height of a hard market. The typical lack of any real financial rating should always be a serious concern for you, your agency and your physician client. Still, when carriers respond to a long slog through a soft market cycle with severe premium increases and restrictive coverage terms, perhaps movement of business to an RRG providing a decent product and charging an adequate premium can make sense.
However, I firmly believe there is no place for RRG’s at the bottom of a soft market cycle. Does your agency have its professional liability placed with an RRG?
Non-standard physician medical malpractice insurance is one of the riskiest lines of professional liability there is. Keep these three things in mind and you’ll increase the chances of a successful placement for you and your physician client. If you need assistance from a specialist who knows how to get the job done right, contact Ethos.