May 2006

CBS bucks trend premium trend

More states qualify for price reductions

Last year, Chiropractic Benefit Services (CBS) RPG Malpractice Insurance program gained national headlines by reducing premiums at a time when most insurance companies were raising them.

Once again, CBS has bucked the trend and announced reductions in still more states, including California, Georgia, Florida, Iowa, Oregon, Missouri and New York, for all doctors in its Class 2 risk category.

In addition, CBS has lowered rates, based on re-evaluating risk, in Colorado, New Jersey, Minnesota, Wisconsin, Connecticut, Hawaii, Michigan, Maryland, Montana, Ohio, Tennesee, Texas and Virginia.

Other companies have failed to follow CBS' lead and nationwide, premiums for malpractice insurance are continuing to increase.

Some policies, particularly those for medical doctors, have soared in recent years. In Maryland, for instance, one company ‑‑ Medical Mutual ‑‑ has increased rates 66.8% since 2003. Last summer, the Nevada Insurance Commission approved a 14.8% overall premium rate increase for professional liability policies. Even many programs aimed at chiropractors have instituted hefty premium increases in recent years.

According to CBS President Timothy Feuling, most DCs aren't aware of the significant difference in premiums for the various policies available to them.

"Many doctors seem to think all policies cost about the same. They're shocked when they see how much they save," Feuling said. "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."

But Feuling warned doctors not to choose an insurance policy based on price alone. "It's an important factor, but not the only one. A policy that doesn't protect you is worthless."

He noted, too, that some companies, in an effort to keep their prices under control, have decreased the coverage offered by their policies or added exclusions.

"Doctors often find themselves paying more and getting less," he said. 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. Some companies also limit their liability to the amount they have spent on the case up to the point when they decide to settle it.

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 explained. "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 noted, 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 stated.

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 warned.

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 agreed, but added, "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." Fueling is also available to speak at local and statewide chiropractic conferences on a variety of risk management topics.