Buying medical malpractice insurance can be a time-consuming, frustrating process. There are many different companies to choose from, policy types to understand and coverage nuances that can make it difficult to really know if you’re getting the best coverage at the best price.
For this reason, many doctors and medical groups choose to use an Independent Agent (or broker) to help them shop the market, compare options, and find the best fit for their practice. But before you go about selecting an agent, let’s take a broader look at the difference between working with an agent versus working direct with a company… and then the best way to work with an agent to leverage their resources to give you the widest range of coverage options.
Working with an Agent vs. Working Direct with a Company
Independent Agents do not work for any one company. They represent multiple companies, which gives them the ability to shop around and find the best fit for you. Having access to multiple companies also benefits you because it drives competition, resulting in better pricing (lower costs).
A direct agent’s first duty is to their employer. They are captive agents and can only offer one malpractice solution from one company. A doctor or group would need to contact multiple different carriers on their own in order to get other coverage options to consider – which can be a time-consuming and tedious process. Many malpractice insurance companies do not sell direct, so even if you were to call on them, they would refer you out to one of their agents to provide you with a quote.
Insurance policies aren't like typical consumer products, where the same item can be sold for a different price through different means. Rates are filed with and regulated by the Department of Insurance in each state and carriers do not have different rates for the business they write direct vs. through an agent. Bottom line — it’s the same price. With all of the benefits of using an agent, it just makes sense to leverage their expertise and "carrier reach" to get you a better product.
Working with Multiple Agents to Shop the Market (Market Selection Process)
So you’ve decided that it’s best to use an agent to help you with your malpractice coverage. Why not have multiple agents shop the market for you and have the best man win? Unfortunately, it's not that simple. There are several reasons why this approach not only doesn't work, but it can actually hurt your chances of having the best quote options to consider at renewal.
When a practice administrator or doctor asks multiple agents to go to market for them, it instantly complicates the purchasing process and you lose the leverage that you may have had by working with just one person. It creates an environment where the agent is trying to make a sale as opposed to doing what is best for the client… and becomes more about them making a commission dollar, then about making the right insurance decision.
Consider the following:
1) When insurance companies know that one agent has control over the decision with their client, they know that they must give it their best shot to be considered. When multiple agents are representing multiple carriers, the customer loses their leverage.
2) When you work with multiple agents, it can quickly become the “wild wild west”. It’s every man for themselves and agents can block markets, manipulate submissions to make one carrier look better than the next and create chaos during the quotation process.
3) When multiple agents are fighting for the business, it becomes all about getting the sale instead of doing what’s best for the client. The agent is looking to become the broker of record, not necessarily prioritizing placing the business with the best carrier option.
4) Working with multiple agents takes a lot of time. The doctor or practice administrator will have to manage each agent… providing them with the submission packets, answer underwriting questions, sign necessary forms, review the quotes and ask for refinements, make sure it’s a level playing field for everyone and ultimately try and determine which broker and quote are best. It is an incredibly labor-intensive process that typically does not give you the result that you want.
The best course of action is to find and select 1 agent to represent your business in the marketplace. The right strategic partner for your practice will bring the knowledge, service, and resources that you need to get a simple, objective overview of the malpractice market – with no biases or desperate attempts to place you with one carrier over another.
Do your homework to find an agent that specializes in medical malpractice, has experience and knowledge in your state/region, and has access to the best carriers available. You should be able to trust your agent to represent you well, understand your coverage needs, provide ongoing support, and help you find the insurance carrier that is the best fit for you – while ensuring that you’re not overpaying!