It can take awhile to finally land on a malpractice carrier that you really like. And once you’re all setup with them, it’s very comfortable and easy to just renew your policy year over year. And to be honest, there are many reasons why it makes sense to stay with the same carrier for the long-haul. But, there are also some drawback and potential issues with staying with the same malpractice company for a really long time. Today we’re going to talk about the Pros and Cons so that you can decide if it’s time for YOU to possibly make a change.
So, we’ve talked a few times before about WHY you should shop around regularly and HOW to go about doing it (in a way that won’t annoy your agent or make the carriers mad). We’ll do a quick refresher on this at the end of today’s episode, but first, let’s start our conversation by talking about the Pros and Cons of staying with the same malpractice carrier for a long time.
Pro #1: It’s a Known Product
The first pro is that when you stay with the same malpractice company for a long time, it’s a known product. You know how they work, when you’ll get your bills and policies, you know how to use their systems, their web portal, how to report claims, access risk resources, and you know what their renewal process looks like each year. It’s easy and comfortable.
Pro #2: Loyalty Incentives
The second benefit to staying for a long time is that you may receive loyalty credits or discounts on your premium. Some carriers also have retirement savings accounts or other funds that the carrier contributes money into each year that you renew with them. It can be very lucrative to stay with the same company all the way until you retire.
Pro #3: It’s Just Easier
And finally, let’s be honest… it’s just easier to stay with the same company. Switching carriers can be a pain in the neck. There’s paperwork involved, you must ensure the coverage matches up so there are no gaps in the insurance, and you have to learn a new way of doing business – meeting new carrier representatives, a new web portal, and how to do business with this new company, etc.
There are many reasons why it’s best to just stay with the same malpractice carrier for the long-haul. But let’s flip the script and consider some potential cons of staying with the same carrier for a really longtime.
Con #1: Maybe Overpaying
First, when you stay with the same company for many years, there’s a higher likelihood of overpaying. Unless motivated to do so, a carrier isn’t going to apply any additional discretionary credits or really “sharpen their pencils” unless they absolutely have to.
When we work with clients who have been with the same carrier for a long time (without ever checking the market), it’s typical to see that they are overpaying by 15-20% or more.
Con #2: Market Changes
The second Con of staying with the same carrier for too long is that… the market has likely changed since you first got your quotes for coverage. It’s been awhile since you’ve looked around and it’s very possible that what you have today isn’t as great anymore. We’re regularly seeing carriers offer new features and benefits, and finding ways to truly add value – whether that’s through educational offerings, claim support programs, stipends, dividends, healthcare grant programs, and other new and exciting offerings to the healthcare community. Unless you’re with a carrier that is on the front line of evolving with the market, you could be missing out on some significant benefits.
Con #3: Agent Laziness
And the final Con of staying with the same carrier for too long is… it allows your agent to become lazy (I know that one is a little ouchy). Instead of them proactively looking at options and providing you with feedback on what’s happening in the market and if/when it might make sense to look around, they are content to keep your existing carrier happy – and they don’t want to ruffle any feathers by moving your business elsewhere. Trust me, it’s way easier for your agent if you just stay put.
We generally recommend that you shop around for malpractice insurance every 3 years. At the 3-year mark, it’s a good time to re-assess your current policy, see what you like about it, what you don’t like about it, what has changed in your practice, and take a quick look at the market to make sure you’re still paying a fair rate.
If you’re not already working with an agent or broker, 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. Your agent can then bring you quote options from competing carriers to give you the chance to review and determine if your current policy still fits your needs – or if you might want to make a switch.
Common Pitfalls While Shopping Around
But while it’s important that you DO go to market regularly, please don’t go overboard. There ARE some common pitfalls when it comes to shopping around that we want you to be aware of, so that you’re not sabotaging your efforts. Let’s take a look at those next…
#1: Too Many Moves
First, you need to be aware that shopping too often and hopping from carrier to carrier can sometimes cause problems. Malpractice carriers keep a record of submissions – meaning, they keep track of how often doctors reach out to them to request quotes. If an underwriter sees that you’ve asked for a quote every single year for the past 5 years, they aren’t going to take you very seriously. It’s like the boy who cried wolf… they don’t know if you have genuine interest in working with them if you’re a constant shopper.
The result of this is that you may not get the best possible rate… or the carrier may eventually choose not to offer you any more quotes.
Similarly, if you hop from carrier to carrier every year, it’s going to look bad to the market and you’ll have a harder time finding a carrier that wants to work with you because you’ve commoditized your malpractice insurance.
#2: It’s More Than Paper
Second, remember that malpractice insurance is about much more than simply a piece of paper to get you credentialed. If you’re only concerned with price and not about value – such as customer service, excellent defense, risk management education, and other important benefits to your medical practice, then you’re being short-sighted.
While it’s important to make sure you’re not over-paying, it’s equally important to ensure that you have a quality insurance policy and a solid company that will be there to protect you in the event that you’re named in a malpractice claim.
#3: Broker Relationship
And third, you need to be aware that shopping around too much may affect your relationship with your broker – in fact, they may simply tell you NO.
Since your agent is the one representing you to the various carriers in the marketplace, they need to make sure they’re doing what’s best for YOU, but they also need to maintain good standing with these carriers. The last thing an agent wants to do is to burn a bridge with a carrier because they frustrate underwriters by shopping around too much. It could result in them losing their appointment with that company and no longer being able to work with them in the future.
So, for your agent, they have to be very careful how they engage when it comes to shopping around on your behalf. It’s a delicate balance between being proactive for their clients and going overboard and getting a bad rap. A good agent will guide you and give recommendations on when it’s time to shop around and when it’s time to stay put.