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BEING AN EFFECTIVE INSURANCE BUYER

There are three critical considerations for buying malpractice insurance. First, policies must be evaluated on their potential long-term costs. It is foolish to change carriers because of a loss-leader rate that may evaporate at renewal time. Physicians must determine the company's timing for anticipated rate increases and their potential size. Second, policies that give the defendant undue influence on the conduct of the litigation will be more costly to all of the insureds. Physicians must realize that every dollar the company spends in the defense of individual claims comes out of their own pockets.

Third, and most important, when buying insurance physicians must determine the cost and terms of availability for the tail coverage. This involves the question of the company's financial stability; insurance is useless if the insurer is bankrupt. Although it is difficult to determine if the company is honest in its projections, it is useful to investigate the company's historic behavior and its behavior in other states. In the insurance business, once a scoundrel, always a scoundrel.

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