November 2005

DCs rapidly switching malpractice companies

CBS registers large increases; cites lower premiums, better coverage

Over the past several months, the profession has witnessed a significant migration of doctors to the CBS‑RPG malpractice program. Although the company has grown steadily since its founding more than a decade ago, recent reductions in premiums has spurred an unusually large surge in interest, according to CBS President Timothy Feuling.

"We have received calls from thousands of chiropractors around the country," Feuling states. "They call to find out about the competitive premiums, and choose our program after learning about our extremely comprehensive policy and excellent customer service."

Although many other malpractice insurance companies have increased premiums in recent months, CBS Malpractice has lowered the price of the policies in about half of the states where the policies are available, including Ariz., Colo., Mich, Minn, NJ, NY, Tex., Va., Wash. and Wis.

"These doctors are shocked when they see how much they save," Feuling adds. "One Michigan practice with five doctors discovered they would save more than $70,000 over a 10‑year period with CBS versus their rates with another large malpractice company. In addition, they gained valuable policy coverage they didn't have before."

In the past, doctors felt they had to wait until their policy renewal date to switch companies, but this is no longer the case, Feuling explains. "CBS Malpractice can switch you over immediately and your previous carrier has to pro‑rate the unused days of premium back to you. One doctor switched just two months prior to his renewal date and saved nearly $400 in a 50‑day period," he says.

Today's increasing financial pressures have made price a top priority for most doctors, but risk management experts stress the need to compare more than just premiums. "It's just as important to compare the type of coverage you get for the money," advises Feuling. "Doctors think all policies are the same, but that's just not true. The last thing you want is to be sued and find out you're not covered."

The policy offered through CBS is considered to have the most comprehensive coverage available on the market, with several important features lacking in other policies. For example, it contains a "consent to settle" clause that gives doctors the right to decide whether or not they want to settle a case out of court. Without that clause, the insurance company can make that decision without the approval of the doctor.

Other policies may have a "hammer clause" that limits coverage to the amount offered in an out‑of‑court settlement. If a doctor chooses not to settle for $50,000, for instance, his or her coverage could be limited to that amount if the case is taken to court. If, ultimately, the plaintiff is awarded $150,000, the doctor would be liable for the remaining $100,000.

Feuling points to sexual misconduct defense and professional board dispute defense as two other important coverages missing in many policies. "Doctors are at greater risk from these two problems than from almost anything else," he explains. "Yet some policies fail to provide any coverage for them. The CBS program covers defense for sexual misconduct lawsuits and up to $30,000 in board dispute defense."

In addition, he notes, the CBS policy offers $10,000 in HIPAA defense and $10,000 in first aid coverage, items that are rarely offered in malpractice insurance policies. "I challenge any doctor to bring me a policy that covers everything our policy covers and at such competitive pricing," he states.

One of the most frequent questions fielded by Feuling and the CBS staff is the relative merits of occurrence vs. claims made policies. Although occurrence policies were standard until the early 1990s, changes in the insurance industry have made them less and less popular with chiropractors, medical doctors and other health care providers.

"As doctors discover the benefits and price savings of a claims‑made policy, they are leaving their pricey occurrence policies behind," Feuling explains. "The claims‑made policy is less expensive, portable and most companies provide prior‑acts coverage and tail coverage at retirement at no extra cost. We switch hundreds of doctors over to the CBS program every month." One benefit of claims‑made policies is that the doctor doesn't pay for tail coverage unless it's needed. Occurrence policies are more expensive because the tail coverage is actually included in the premiums."

A great deal of Feuling's time is spent providing doctors with information about the two types of policies, with specific figures and comparisons so they can make the decision that's right for them.

"For doctors with claims‑made policies, CBS picks up prior‑acts coverage from their prior carrier at no cost. Occurrence doctors get to start at our low first‑year claims‑made price that matures over a four‑year period. Often the mature premium is hundreds of dollars less than they are paying with their current carrier for occurrence. The doctors enjoying the biggest savings are the ones with an occurrence policy who switch to claims‑made."

Feuling says the savings will differ for each doctor, but can often reach four figures. "For example, a doctor in Texas who has an occurrence policy priced at $2,900, can save thousands of dollars over just the first five years, and continue saving about $500 each year thereafter. Many doctors I talk to have had an occurrence policy for 20 years or more. Many of them have spent $80,000 and are now over the age of 52. They could have saved thousands of dollars and would receive a free tail at retirement with the CBS Program by purchasing claims‑made. Average chiropractors practice well into their 60s, meaning they will all qualify for free tail coverage. For doctors who are already over age 52, the CBS program means almost immediate savings since, after just one year, they get free tail coverage when they retire.

One reason for the lower premiums ‑‑ and the growth of CBS ‑‑ is that the CBS Program is underwritten by CNA Insurance Company, a $63 billion industry leader that is rated "A" with AM Best.

"Right now, nearly half of all malpractice companies don't have a rating by AM Best or have an 'A‑' or lower rating," Feuling warns.

Most insurance experts say that insurance companies with less than an A‑ rating are too risky. The popular information website, about.com, advises: "If your insurance company does not have an AM Best rating of at least a 'B,' you should find another company. It is even better to stay with companies that have a rating of at least an 'A‑'."

Feuling agrees, but adds, "Why settle even for an 'A‑' when you can get an 'A' rated company? You've worked too hard to build your practice and your assets. Do you want to put them at risk by choosing a company that isn't one of best?"

For more information on malpractice insurance, or the CBS Malpractice Program, contact Timothy Feuling at 800‑883‑0412 or visit the CBS website at www.cbsmalpractice.com to request a free "Quick Quote."