June 2005

DCs save thousands with CBS

CBS reduces premiums as others soar

Already rocked by the failure of several malpractice insurance companies, doctors of chiropractic have been hard hit yet again by news that one of the profession's major providers ‑‑ the National Chiropractic Mutual Insurance Company (NCMIC) ‑‑ has dramatically increased premiums.

In contrast, Chiropractic Benefit Services Malpractice RPG (CBS) reduced premiums in most states.

Drastic increases in premiums often raise a red flag of concern among policy holders, since it can be an indication of financial problems. At times, however, it's the only viable way for a company to recoup losses suffered by temporarily offering unrealistically low premiums to lure customers. This strategy often backfires for companies, leading to bankruptcies and forcing insurance companies to discontinue certain lines of insurance.

Mark Crane in a Medical Economics article noted that this tactic has caused much of the turmoil in the insurance industry. "The insurance companies themselves share culpability because they kept premiums artificially low for years," he explained. "They either miscalculated how much money they'd need to pay future claims, or engaged in low‑ball price competition to win market share, or used investment income to offset losses in the courtroom."

PHICO, for instance, had rates "that were probably lower than anybody else in the state," said John Loudon, vice president at Dulaney, Johnston & Priest, a commercial insurance brokerage in a Wichita Business Journal article. That strategy led to its downfall.

To "sweeten the pot" for doctors, NCMIC has given a small dividend to policy holders for each of the past 10 years, although that dividend is not guaranteed. According to NCMIC, "The NCMIC Board of Directors meets annually in the fourth quarter to determine if a dividend will be declared and what the overall amount will be. This decision is based on the ongoing financial stability of the company, return on investments and how well you, our policyholders, have managed risk in your professional practices."

Yet, many doctors are finding that the dividends fail to make up for the higher premiums charged by the company. "In the past, doctors were so happy to get a check each year ‑‑ even a small one ‑‑ that they never really calculated the cost of that dividend," states CBS President Timothy Feuling, author of the "Malpractice Prevention Program."

Recent economic challenges have changed that, he explains. "Today, chiropractors are far more savvy when it comes to their money. They don't throw it away on false savings. They study the figures and find out precisely what their malpractice insurance policies really cost."

Their study, Feuling says, is leading them to CBS. "Our phones have been ringing continuously. In the last few months, we've had a 200% increase in call volume," he notes. "Doctors are taking the time to examine various policies and many find they can save substantially by switching to CBS. In New York, one DC saved $2,400 each year when he switched to CBS; in Texas, another chiropractor saved $1,500. Other savings included $1,000 for a doctor in Washington State, $1,040 for a doctor in Illinois and $1,000 for a DC in Wisconsin. The story's the same cross the country. Doctors are saving thousands of dollars with CBS."

The increased volume of "switches" has prompted CBS to set up procedures that allow doctors to change policies before their renewal date, and to process the transfers quickly and easily.

"It's very important, however, that they don't choose their malpractice insurance solely on the basis of price," Feuling stresses. "A low‑price policy that doesn't offer exceptional coverage is no bargain. Saving a few bucks now could cost you your entire life savings later if you're sued and you find you aren't covered."

Important gaps in a policy may include exclusions for defense of sexual allegations, board disputes and HIPAA compliancy infractions. Some policies specifically exclude "sexual impropriety, sexual intimacy, sexual assault, sexual harassment or any other similarly defined act" (NCMIC 2003 policy provision) or offer limited coverage for board disputes (as low as $5,000 per incident).

The policy offered through CBS covers defense for sexual misconduct allegations, provides $30,000 in professional board dispute defense, and up to $10,000 in HIPAA defense annually.

In addition, insurance companies may choose to settle a case rather than fight it simply because it's less costly. To avoid this situation, doctors need to pick a policy with a "consent to settle" clause, which gives them the power to make the decision whether to settle or not. One expert, writing in Medical Economics, warned, "... stable premiums are no bargain if rising legal costs mean you could end up with a weaker defense or be pushed into a settlement you don't want."

Of course, the financial stability of the underwriter is of great importance as well. CBS's underwriter is CNA Insurance Company, which boasts more than $60 billion in assets and an AM Best "A" rating and is considered one of the most financially successful and stable companies in the industry.

Choosing an insurance policy is like selecting office space for a practice, says Feuling. "You look at the monthly lease fee as well as the size, location and layout of the space. You don't buy a too‑small office space in a poor location just because it's cheap, and you don't overpay for a mediocre spot. You look at the total package."

When it comes to malpractice insurance, he adds, "CBS is prime real estate, with top coverage at a price that could save you thousands of dollars. You owe it to yourself to comparison shop and switch to CBS."

To obtain more information on malpractice insurance, or a free quote, call CBS at 800‑883‑0412 or visit www.cbsmalpractice.com. The website also contains extensive information regarding chiropractic professional liability and risk management.