Five Things to Look at When Evaluating a Liability Company

Physicians Running in Hallway Depending on your state and specialty, medical malpractice insurance can be extremely expensive. At best, it is very expensive. So, we here at certainly understand how important cost is when evaluating which medical malpractice insurance policy to choose. But, not all med mal insurance companies are created equal. There are several other factors that physicians should consider, in addition to cost, when choosing their insurance company.

Here are five things that a physician should look at when evaluating a medical malpractice insurance company:

Surplus. This is the amount of assets a company has minus its liabilities. This is also called the company’s “net worth.” This is important because it determines how well a medical malpractice insurance company is able to make payouts, including unanticipated losses.

Net Written Premium. This is the amount of money a company has left after it has purchased its own reinsurance. Not all medical malpractice insurance companies have reinsurance. But, when a company has reinsurance, this is another added level of security for the physician.

Loss Reserves. This is the amount of money “reserved” for payouts and loss adjustments for open claims.

Ratios. There are several ratios that help to indicate how well an insurance company can assume risk. One important ratio describes the ratio of net written premiums to surplus. Ideally, the ratio is close to 1:1 and no more than 3:1. See our Q&A page to learn about more medical malpractice insurance ratios of importance.

Ratings. A.M. Best is the most well-known, and well-respected independent insurance industry analyst. Every physician should learn the rating of a company he or she is considering getting coverage with. Their ratings vary from “A++” to “C-.” Another, lesser known, company that rates medical malpractice insurance companies is Demotech, Inc.

When searching for a medical malpractice insurance company, don’t just shop according to price. There are several other factors that should be evaluated to be sure that you are choosing the coverage that is right for you. While you don’t want to pay more than you have to, you also want to make sure that you have excellent coverage in place, should you need it.

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