Can Norcal help your liability needs?
Headquartered in San Francisco, NORCAL Mutual Insurance Co. was established as a small medical malpractice insurer in 1975. Since then, NORCAL has grown to become a dominant insurer in California and Alaska. The company currently has more than 20,000 insureds, including doctors, hospitals, clinics, medical groups and other healthcare entities. NORCAL was the first malpractice insurer in California to offer a dividend to its clients, returning more than $400 million in total.
The independent rating agency A.M. Best has assigned NORCAL a financial strength rating of “A” (Excellent), attaching to the rating an outlook of “stable.” This “A” rating was most recently reaffirmed on June 10, 2010, and NORCAL has maintained a rating of “A” or higher with A.M. Best throughout its entire 25-year history. A.M. Best also assigns the company an issuer credit rating of “a” with a “stable” outlook. These high ratings are based on criteria designed to measure the strength of a company’s balance sheet, operating procedures and business profile. Most brokers recommend an A-rated and admitted carrier like NORCAL, since these companies are financially sound and much less likely to become insolvent. If a physician chooses a lower-rated carrier and it goes bankrupt, there can be an interruption in coverage, which can be harmful when seeking a new policy. In 2009, the last year for which complete financial data is available, NORCAL posted a surplus of $506 million, wrote premiums of $177 million and offered a dividend for policyholders of $14.5 million.
Policies from NORCAL typically provide coverage on a claims-made basis. This means that claims are only covered when the incident occurred after the policy’s retroactive date, and the claim is filed within the effective period of the policy. In contrast, an occurrence policy covers any claim regarding an incident that occurred during the policy period, regardless of when the claim itself is filed. This difference means that a physician insured by a claims-made policy must maintain perpetual active coverage. The advantage of a claims-made policy is that the premium starts out much lower, though it increases yearly until the policy becomes “mature,” usually after five years. If a physician switching to NORCAL wants to be covered for incidents that occurred before the date of the switch, he or she can purchase prior-acts coverage, also called nose coverage. Physicians who are retiring or switching insurers may purchase tail coverage, which covers claims made in the future regarding incidents that occurred during the period of the policy with NORCAL. Free tail coverage is available for retiring physicians older than 55 years old, who have been insured with the company for at least five years. Free tail is also available at any time for disability or death. NORCAL recognizes that many older physicians increasingly want to continue to offer charitable services part-time, and recently expanded its options for partial retirement without losing tail coverage.
NORCAL offers a variety of discounts to its clients. Reductions in the premium are available for physicians who are new to practice after residency or working part-time hours. Certain group-sizes also qualify for discounts, and a voluntary deductible can reduce the premium paid. Some physicians are also able to earn a 5-percent discount on their premiums by participating in risk management activities as directed by NORCAL. These discounts are applied on an individual basis, and not all discounts are available to all physicians.
NORCAL offers a variety of risk management services. These include consultation services, like a 24/7 phone-based advice line, as well as a strong program in Continuing Medical Education. The CME program helps physicians earn the credits they need to maintain certification. NORCAL also publishes a monthly newsletter about liability for its policyholders.
This write-up for NORCAL was put together by Michael Matray, the Editor of the Medical Liability Monitor