The marketplace for stand alone tail coverage continues to be strong, especially for physicians with higher premiums. Coverage for obstetricians and pediatric surgeons continues to be difficult to place in the standard market.
The biggest change in the last year is the flood of unrated carriers and risk retention groups (RRGs) into this space. The brokers at InsureTail.com instruct clients to avoid buying coverage from carriers who may not be around to pay claims at all costs. Having a policy from an insolvent carrier means claims won’t get paid and it could jeopardize credentialing if a future employer or facility discovers your prior acts are uninsured.
Risk Retention Groups (or RRGs) pool together risk from similar insureds in an attempt to lower costs. The federal government has exempted them from state regulation, meaning no one monitors their capital position and there is no guarantee of funds in the case the company goes out of business. Even worse, most RRGs are allowed to assess former insureds to cover any shortfall in funds. A doctor could buy a tail for 20% less from an RRG only to get a bill for twice the original premium years later. Insurance brokers refer to strong carriers endorsed by AM Best, the industry rating agency, as “rated”. Many hospitals have requirements in their bylaws that staff physicians stick with rated carriers.
Physicians with RRGs and unrated carriers are generally stuck and unable to secure quotes from the rated insurers in the market. The underwriters are concerned with adverse selection, the bias that would cause someone to hide claims from their current unrated carrier in an attempt to buy a rated tail policy to ensure payment.
Gaps in coverage are an emerging issue that employers are concerned with. Our brokers have placed several complicated policies to close gaps in coverage years in the past.
Currently, there are no rated carriers offering standard terms to CRNAs, pharmacists, PAs, NPs, nurses or other mid-level providers. Restricted coverage is available starting at $10,000, which generally only appeals to those who have had claims issues or disciplinary actions. There are unrated carriers offering terms but as stated before, we do not recommend the purchasing of tail insurance from non-financially sound carriers.
The market remains strong, give our talented brokers a call today at 866.23.3820 to discuss your situations and get a free consultation on your options.