What To Do When Your Malpractice Carrier Goes Out Of Business


Help! My malpractice carrier is going under! This week we're providing key steps to take if you find yourself in sudden need of new malpractice insurance. As the medmal market begins to turn, we're starting to see a few carriers exit the market. What should you do if this happens to you? Here are 5 tips to help you take quick action to secure new coverage going forward.

1.       Contact a Knowledgeable Malpractice Insurance Agent

If your malpractice insurance carrier is going out of business (or beginning to show signs of financial instability), the first course of action is to contact a knowledgable malpractice insurance agent to discuss the situation. Be sure to choose an agent that specializes in medical malpractice insurance, has access to many different markets, and has experience in the given field. While many insurance agencies may claim to have expertise in the medical malpractice space, it’s often difficult for multi-line agencies to keep up with the rapidly evolving medmal market. Do your research and find an agent that can offer you the expertise, service, and integrity that you’ll need as you begin evaluating your options.

2.       Review your coverage to determine needs

Once you’ve selected an agent, review your current coverage to determine your needs going forward. If you have a Claims-Made policy, chances are you’ll need to secure prior acts coverage from a new carrier going forward. This means that the new insurance company will assume the responsibility for any future filed claims related to services rendered back to your policy retroactive date. If you have open claims with the carrier that is going out of business, talk to your agent and the defense attorney that is representing you to see how those claims will be handled going forward. It’s possible that the state guaranty fund will step in to handle the claims going forward but be proactive in asking the question so that you know what to expect and can make other arrangements, if need be.

3.       Shop the market

Once you’ve determined your coverage needs, work with your malpractice insurance agent to go to market. Most malpractice agents will have access to 3-4 primary carriers in each state and a handful of excess & surplus (non-standard) markets, as well. Don’t be surprised, however, if some carriers decline to quote your coverage. Some companies shy away from business that is being cancelled by another carrier – even if the cancellation reason has nothing to do with you, personally. A prudent malpractice agent will help you navigate the market and provide you with options and insights to make the “shopping” process as easy as possible.

4.       Compare options

Once you have a handful of quotes to review, carefully compare coverage options and be sure to look at more than just the price tag. Look at the carrier’s history, financial stability, coverage offerings and areas, programs, risk services, affiliations, and other key factors as you are making your decision. Work closely with your malpractice agent to better understand what each carrier has to offer. Oftentimes the agent can provide other insights into the company’s service, timeliness, flexibility, and other factors that may make a big difference to you and your practice.   

5.       Consult with your agent and promptly move to the new carrier

Once you have decided on a new carrier, complete the application and any other necessary forms and move promptly to the new company. It's always advisable to move while there is still time, as opposed to waiting until you receive your cancellation notice and then frantically switch to the first carrier that offers you a quote. Some states will require 30 days (or more) advanced notice for cancellations, so talk to your agent to determine the right time to switch and give yourself plenty of breathing room. Take your time to review the options, compare coverages + prices, and move to a carrier that will be a solid long-term partner for you.