By Matt Gracey, Medical Malpractice Insurance Specialist, Danna-Gracey
As the new year begins in Sunny Florida, dark clouds are forming in the market for doctors’ medical malpractice insurance. For the last 12 years malpractice premiums have steadily decreased until the last few years of flat prices. As the frequency and severity of claims against doctors have begun to rise in the last few years, few insurers raised their prices because of competitive fears.
Insurers Response to Growing Legal Fees and Claims Expenses
Most insurers started taking money out of their claims’ reserves and offset the growing expenses of legal fees and claims expenses so as not to need to increase their rates. Some decreased dividends and other “behind the curtains” discretionary credits so as not to have to publically announce rate increases. All of this circumvention of straight up premium increases seems to now be behind us, as over the past year, a number of companies have either announced or been approved for more significant rate increases. With most insurers of doctors in Florida now losing money on every policy they write, the only question now is how much will rates increase and how quickly.
My prediction is that many specialties over the next three years will experience pricing increases of up to 25 percent, with some even higher. In Georgia, one insurer announced that rates increased up to 45 percent on one specialty and 36 percent on another. We in Florida are no longer immune from such market changes, unfortunately.
How to Protect Yourself from the Current State of the Insurance Marketplace
My best advice to prepare for this hardening of the malpractice insurance marketplace is very simple. First, make sure you are insured with one of the larger, financially strong insurers, as many, if not most, of the small insurers and RRGs will very likely either cease covering our doctors or get merged into the larger insurers. The last transition period from soft to hard market conditions in Florida’s malpractice insurance saw the insurers offering coverage shrink quickly from over 50 to under five insurance companies still willing to cover doctors here.
The second move to consider is to join a purchasing group to more strategically and powerfully purchase coverage with your peers. The best programs are very professionally run with top-drawer insurers acting as partners not just vendors. There is power in numbers and now is the time to seek such protection.
Matt Gracey, Jr. is a medical malpractice insurance specialist with Danna-Gracey, an independent insurance agency based in downtown Delray Beach with a statewide team of specialists dedicated solely to insurance coverage placement for Florida’s doctors.