Medical insurance underwriting Featured

7:00pm EDT January 31, 2007

Advancements in the medical industry create many opportunities for physicians to participate in nonstandard procedures. Examples of these opportunities can be seen in the pages of most metropolitan daily newspapers where advertising seeks participants for clinical trials and new medical processes.

As technology evolves and new procedures become standard, a physician needs to be conscientious that the medical liability he or she carries provides coverage for these new procedures. Some policies will limit the scope of operations the physician practices in, and anything outside of this scope is not covered in the case of a loss.

Physicians may believe they are well versed on their insurance policies, but often they are not up to speed.

“I find many physicians engaging in nonstandard procedures which, due to advancements in technology, seem as daily protocol to them,” says Tara Williams, business account executive at Hilb, Rogal & Hobbs of Southwest Florida. “However, the insurance carriers writing the restrictions on their policies are not looking through the same eyes as today’s physicians, and many of the modern procedures are not covered by the standard professional liability policy.”

Smart Business spoke with Williams about the unique insurance exposures generated by evolving technology, nonstandard procedures and clinical trials.

What are examples of nonstandard procedures that might create insurance problems for physicians?

In today’s medical industry, we are seeing an increase in outpatient surgery procedures, teller-radiology and teller-medicine exposures, anti-aging procedures and clinical trials. There have been an increased number of physicians working in walk-in clinics and retail shops like Wal-Mart and Target. The exposures outside of the standard office and hospital environment can be of concern. Many times, these types of exposures are not covered under the physician’s professional liability policy.

What kinds of insurance issues are created when a physician engages in a new clinical trial?

A major area of growth in the health care industry is a result of clinical studies. Physicians see this as a way to further their education and participate in the evolution of medicine.

Even though these studies can bring significant improvement to the health care industry, many times they generate unexpected results and financial loss to those involved. Participation in clinical trials involves multiple parties of interest and therefore insurance coverage becomes very intrinsic.

A physician needs an insurance professional’s help to evaluate the exposures created by participating in a clinical trial, as well as securing the appropriate policy to cover such a nontraditional exposure.

A few years back, many physicians were electing to not purchase professional liability coverage. Is this still the trend?

As we all know, the current insurance crisis in Florida has now evolved from medical malpractice to increased property rates and lack of capacity. In fact, medical malpractice is not even on the agenda for legislative session this year. The insurance market is currently considered ‘soft’ on the casualty side of table. Liability rates have been reduced and coverage offered has been broadened. Medical malpractice liability continues to be pricey in comparison to other states, but this is just a result of the litigious mentality in Florida.

There are physicians who continue to go bare — but other options are available to those who chose to do so. One of these options is a called Medical Legal Defense Reimbursement, a product that received an XI rating by the popular A.M. Best Co. The coverage protects a physician’s assets by providing reimbursement for legal expenses incurred by having a medical malpractice claim. It is a type of partial coverage that is accessible for a reasonable premium.

Are there any additional exposures that physicians need to protect themselves against?

Yes. Today in the health care industry, patient privacy is very important and legally mandated. Physicians possess and must secure for their patients a significant amount of personal information — stored electronically as well as in paper files.

The exposures present in a physician’s office are substantial in terms of personal identity theft, cyber extortion and network security. This coverage can be obtained through many of the carriers focused on the health care industry. Each carrier has its own unique terms and conditions, so it is important for a physician to make sure the privacy protection insurance that he or she chooses completely addresses the needs of the individual’s practice.

Physicians may believe that patient identity theft could not happen at their practice because they have adequate precautions for dealing with personal information. That may be the case. What they might not think of are the costs they would incur to investigate or defend themselves against an allegation, even if it is unfounded.

TARA WILLIAMS is a business account executive at Hilb, Rogal & Hobbs of Southwest Florida. Reach her at (941) 554-3112 or