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Monthly Archives: October 2013

Extended Reporting Endorsement or “Tail” coverage on a Dental Malpractice Insurance Policy

If your dental or oral surgeon malpractice insurance policy is written on a claims-made basis, it applies only to claims that occur between the retroactive date and the end of the policy period. If you drop your policy, or switch carriers, you may need to purchase an Extended Reporting Endorsement or “Tail” policy to maintain coverage after the policy has expired. The Tail Policy is an extension of dental malpractice insurance coverage. This Extended Reporting Endorsement, or Tail policy, will extend the period of time to make or report a claim. It allows the oral surgeon or dentist to report an incident or claim to his dental malpractice insurance company after his dental malpractice policy has ended. The dental work must have been done subsequent to the retroactive date on the policy. If the oral surgeon or dentist cancels a dental malpractice insurance policy or switches to a carrier that does not provide coverage for prior acts, there is a large additional premium for the Extended Reporting Endorsement or “Tail”—possibly as much as two or more times the current policy premium. Most dental and oral surgeon malpractice insurance companies offer the Extended Reporting Endorsement or “Tail” policy at no charge for death, disability, or retirement from the practice of dentistry.

John Gracey Backer, CPA

John Gracey Backer, CPA, is the Treasurer of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Malpractice, Professional and Personal Insurance for the Healthcare Provider. He can be contacted at 800-272-6055 ext 128, or at

Medical Malpractice Insurance Market in Florida

Like many industries, the medical malpractice insurance industry is cyclical in nature. Each cycle lasts from two to ten years and is defined as either “hard” or “soft”. Hard markets with higher premiums, more severe losses, and restrictive underwriting, reflect the fact that insurance companies are losing profitability. Soft markets, on the other hand, characterized by low premiums and less strict underwriting rules, mean that insurance carriers are returning to profitability. We have been in a “soft” market in medical malpractice insurance for the past several years.

What Exactly is a Soft vs. Hard Market?

In a soft market, the following occurs:

  • Lower insurance premiums;
  • More expansive coverage;
  • Flexible underwriting;
  • Greater carrier capacity, resulting in more policies being written with higher limits; and
  • Greater competition among insurers. More companies entering the marketplace.

In a hard market, we can expect:

  • Higher insurance premiums;
  • More stringent underwriting;
  • Less insurer capacity, meaning fewer policies are written and carriers are hesitant to write higher limits; and
  • Less competition among insurers. Companies flee the marketplace.

Base premiums for medical malpractice insurance are continuing their downward trend, as they have for several years now. In fact, according to industry officials, the current soft market has lasted twice as long and has been twice as deep as previous soft cycles. While rates have declined, their rate of decline has not been as precipitous as in the past. Companies still offer a variety of credits to lure the best physicians; however, there is evidence that the extent of the credits may be lessening. Companies have simply run out of ways to reduce premiums.

Most medical malpractice insurance companies see the trend of migration of independent physicians toward becoming employees of hospitals or large healthcare groups as the most worrisome trend to market share. This trend will likely deepen as the new healthcare law is implemented and the formation of Accountable Care Organizations begins to gain traction. It is likely that any hardening of the market will take several years, though. The industry as a whole is strong financially and has experienced these challenges before.

As an insurance agent that specializes in medical malpractice insurance, we can shop your policy among a stable of quality insurers.

Wendy Ring

Wendy Ring is a Malpractice Insurance Agent at Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Malpractice, Professional and Personal Insurance for the Healthcare Provider. Wendy can be contacted at 800-272-6055 ext 127, or at

What is a Personal Umbrella Policy?

Umbrella-PolicyProbably the biggest exposure any of us has is in our personal life is driving in our car and living in our home. Catastrophic accidents do not happen often. If they do, however, the results can be devastating, especially if we do not have enough insurance. We may carry auto and homeowners insurance, but these may not provide enough protection. That is where the Personal Umbrella Policy comes in.

A Personal Umbrella Policy (PUP)covers you for damages and costs you or a family member have to pay if sued—beyond what is covered by your underlying auto, home, motorcycle, boar, RV, policies. For example, if you have a bad automobile accident and are at fault, your primary auto policy will provide the first layer of coverage. Your Personal Umbrella Policy will provide the final layer until policy limits are exhausted. If someone is injured on your property, and the injury requires surgery, the medical bills may exceed the coverage on your homeowner’s policy. Your PUP will kick in until its limits are exhausted.

Who is Covered?

Generally, you, your spouse or domestic partner, and resident relatives who are still dependent upon you are covered. In addition, coverage generally extends to a person using your covered vehicle with permission.

Where is Coverage Applicable?

Depending on your policy, coverage is worldwide.

How Much does a PUP Cost?

The cost is minimal, because the exposure is minimal. Again, depending on the company, you may be charged more because of accidents, tickets, additional vehicles, additional homes, or teenage drivers.

How much coverage do I need on my primary policies?

Generally, you need $300,000 liability limits on your primary auto and homeowner’s policy. If you fail to carry adequate limits, a gap may ensue. You would be responsible for filling this gap.

How do I purchase a Personal Umbrella Policy?

Simply call our office and talk with your Account Manager. Special programs are available for healthcare professionals.

Barbara Gracey Backer

Barbara Gracey Backer is the Vice-President of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Professional and Personal Insurance. She may be contacted at 800-272-6055 X118 or at

What is prior acts coverage in Dental Malpractice Insurance?

If an oral surgeon or a dentist has a claims-made professional liability policy that covers claims arising from acts that happened prior to the inception date of the current dental malpractice policy, this is referred to as “prior acts coverage”.

For instance, if an insured dentist or oral surgeon has a retroactive date of January 1, 2010 and a policy period of January 1, 2011-2012, and a claim occurs on July 1, 2011 based on work the oral surgeon or dentist performed on July 1, 2010, the dental malpractice claim is covered by his “prior acts” coverage. If an insured dentist or oral surgeon switches carriers, maybe looking for a lower premium or joining a group insured with another dental malpractice insurance carrier, the new malpractice insurer may provide full prior acts coverage—back to the retroactive date on their dental malpractice insurance policy.

If the insured is without coverage or “bare” and submits an application for insurance, the carrier will not provide prior acts coverage, but, rather, will set the retroactive date and the effective date as the same.

The purchase of prior acts coverage on a dental malpractice insurance policy eliminates the need for the dentist or oral surgeon to buy a “tail” policy from the prior malpractice carrier upon cancellation of that coverage—assuming the effective date of the new dental malpractice coverage is consistent with the prior policy and, therefore, there is no gap in coverage. It allows a dentist or oral surgeon to seamlessly switch dental malpractice insurance carriers throughout their career without having to purchase “tail”coverage.

John Gracey Backer, CPA

John Gracey Backer, CPA, is the Treasurer of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Malpractice, Professional and Personal Insurance for the Healthcare Provider. He can be contacted at 800-272-6055 ext 128, or at

Florida Malpractice Medical

The Florida Malpractice Medical Insurance Market Will Remain “Soft” in the Years Ahead

The Florida malpractice medical insurance market remains competitive in 2013. There are several major players in the State of Florida, including The Doctors Company, Medical Protective, Mag Mutual, Florida Doctors Insurance Company and HUG. New carriers entering the state are putting pressure on rates, shrinking Florida malpractice medical insurance company margins. Insurance companies are applying credits: Risk Management, Claims-Free, Society, and Discretionary for larger agents. In addition, some carriers offer loyalty programs to reward its insured physicians for loyalty over the long term.

There has been considerable consolidation of physician offices. Whereas physicians formerly practiced alone or in small groups, they are now joining multispecialty and multistate physician networks. Family Practice physicians and Internal Medicine physicians are being absorbed by hospitals and integrated healthcare operations on a regional basis. This reduction in supply puts further pressure on Florida malpractice medical insurance rates.

The Florida malpractice medical insurance market has traditionally been quite volatile. With a decline in claims frequency and the passage of tort reform laws in Florida, it is now deemed to be “soft”, meaning that premiums are down from highs in the early 2000’s. The Florida malpractice medical insurance landscape will probably remain “soft”, at least through 2016, according to industry sources.

Having flood insurance can keep your business afloat

The flooding that is happening now in Colorado could happen here. Floods can happen anytime, anywhere. It doesn’t take much water to cause a business to go under. A few inches of floodwater can cause tremendous damage…to your building, your equipment and your inventory. The expense of rebuilding, replacement and repair can be staggering. The costs can erode your operating funds and strain your credit

Flooding can affect every zip code

While your area might not be in a high-risk zone, it is not immune to flooding either. In fact, almost 30% of actual flood claims come from low to moderate risk areas. New land development can increase flood risk, especially if the construction changes natural runoff paths. And weather patterns are changing, making neighborhoods that have never before experienced a flood more vulnerable.

Don’t expect the government to help

Governmental assistance is only available in less than half of all floods, and it usually comes in the form of a loan-repayable with interest. In contrast, flood insurance pays qualified claims quickly, giving you the cash you need to get your business back to business.

There is a thirty day waiting period before coverage takes effect. Don’t wait until it is too late.

Changes to the Recent Flood Insurance Program

Changes coming for National Flood Insurance Program (NFIP) rates

The Biggert-Waters Act of 2012 has changed The National Flood Insurance Program (NFIP) to fill a $20 billion deficit created by large-scale disasters, such as hurricanes Katrina and Sandy, and to ensure that flood insurance rates more accurately reflect the real risk of flooding. The act eliminates premium subsidies. The greatest impact will be felt by older secondary homes in high risk flood areas.

In general, rate changes will have the greatest effect of properties built before 1975, or prior to the initial flood insurance rate map (FIRM) for the community that are in a high risk flood zone. These homes are referred to as being “Pre-FIRM”. Their rates have been subsidized over the years.

The NFIP flood insurance program has announced a rate increase of generally 10% (varies depending on the flood zone) that affects everyone. Everyone will also see a new charge of 5% to cover the Reserve Fund assessment. Preferred Risk policies in zones X, B or C are exempt from these two increases

The effect of the changes on the other NFIP policyholders will depend on their circumstances:

  • 81% of the policyholders are paying the correct actuarially-determined rate.
  • 5% of policyholders are paying a subsidized pre-FIRM rate. These are pre-FIRM non-primary residences, business properties and Severe Repetitive Loss policies. Their rates will be increasing by 25% per year until the true premium is reached.
  • Not all subsidized policies will see large increases. Obtaining an Elevation Certificate is the best way to determine the true premium. Some premiums will decline, some will stay about the same, some will see a moderate increase and some a large increase. Without an Elevation Certificate, one cannot evaluate the true risk. Note: if you have a Preferred Flood Policy now, this does not apply.
  • 10% of the policies are for primary residences. These policies for pre-FIRM homes will continue to be subsidized until the home is sold or the policy lapses.
  • 4% of the policyholders are in pre-firm condos and multi-family buildings that are primary residences. Their subsidies will continue until FEMA develops guidance for removing the subsidies.

If you need to have an Elevation Certificate, it must be completed and signed by a licensed surveyor. It will certify the elevation of the lowest floor of your home or business. This is especially important if your structure is in a high-risk flood area. A photo of the structure must accompany the Elevation Certificate.

The rate increase will go into effect on October 1, 2013, except for Non-Primary residence polices that went into effect January 1, 2013. This includes units in condominiums and multi-family dwellings.

As you can see, the rules are not straightforward and can vary due to the type building, age of the building, flood zone and more. The general elevation of an area is important, as is the elevation of your building’s slab compared to the elevation of the middle of the road.

It is said that about 20% of all flood losses do not take place in a flood zone. The devastating Colorado floods occurred in an area that was considered low-hazard. We have many areas like that in Palm Beach County. Some are along A1A and some are further inland. In some cases, Preferred Risk policies can be written on homes in these areas at a greatly reduced premium.

For information or advice on this important coverage, please call us at 561-276-6055 or 800-272-6055 or email

Barbara Gracey Backer

Barbara Gracey Backer is the Vice-President of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Professional and Personal Insurance. She may be contacted at 800-272-6055 X118 or at

One question we are asked is “If we haven’t had a hurricane in a while, why are my homeowner’s insurance premiums increasing?

Remember that wind is only one peril covered by the homeowner’s policy. Other perils, like sinkhole and water damage, have also driven up rates. In addition, liability claims have been going through the roof, as more and more people resort to lawsuits to settle disputes.

There are ways to save money on your homeowner’s insurance:

  • Raise your deductible – Over your lifetime, a higher deductible will save you a considerable amount of money. Of course, you risk more out-of-pocket if you have a claim, but you save on your premium each and every year.
  • Buy a newer home – Insurance companies like newer homes, which have less chance of problems with electrical, heating and plumbing. The structure itself is often in better shape.
  • Live in a good location – Near a fire station is good, out of a flood-prone area is good, removed from a body of water is really good.
  • Cover only your structure – A reputable insurance agent will not let you cover the value of your land. Ask for a replacement cost estimator that determines the insurable value. And remember—neither the market value nor the mortgage value is a valid determinant of your premium. You are looking for the cost to replace with like kind and quality.
  • Tailor your contents coverage- A homeowners policy comes with a built-in limit for your personal property, exclusive of high value items. It is important to take stock of what you have to gain an accurate figure for your contents coverage.
  • Be safe—Install an alarm system, smoke detector, and smoke alarms to reduce risk and gain credits. It is a good idea to check with your agent first to see which credits apply.
  • Watch your inflation-guard coverage-Your insurance company automatically increases your dwelling coverage every year to keep pace with inflation. This is to ensure that your home is insured to the rising costs of rebuilding in your area. Over time, this limit can get out of sync with reality. It is a good idea to check it every few years and call your agent if you would like him to run a new costimator.
  • Have good credit – Some insurance companies check your credit score as part of the underwriting process. Good credit means that you will be insured by a better company and pay less for your insurance.

For more information on ways to save on your homeowner’s insurance, call our Personal Lines Department.

Barbara Gracey Backer

Barbara Gracey Backer is the Vice-President of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Professional and Personal Insurance. She may be contacted at 800-272-6055 X118 or at

What is Medical Malpractice Surplus Lines Insurance?

If a physician and surgeon malpractice insurance company in Florida is referred to as a “standard” carrier, it means that it is licensed with the Department of Insurance to write business in Florida. If a person cannot be written in the standard marketplace, because it is too big, too unusual, or too risky, it is placed with an insurer that is not licensed in the state. The Excess and Surplus Lines insurer can design insurance coverages and negotiate pricing based on the risk without having to file with the state Department of Insurance. Since these companies are not strictly regulated by the state, they are freed from the form or rate regulations imposed on licensed insurers. This gives them the freedom to design and price their policies, and, therefore, accept physician and surgeon malpractice risks that others will not accept.

Medical Malpractice Surplus lines companies are monitored for financial stability in the state where they are located. This is important because, if the insurer were to fail, there is no guaranty fund to protect the physician or surgeon. State insurance departments require surplus lines carriers to submit financial information, articles of incorporation, list of officers, and other general details. They also cannot write insurance that is typically available in the admitted market, are not protected by the state guarantee fund, may pay higher taxes, may only write a policy if it has been rejected by three different admitted carriers, and only when the medical malpractice agent placing the business has a surplus lines license. States keep a list of approved Medical Surplus Lines carriers, and business may only be placed with those approved carriers.

In order to purchase a Medical Malpractice Surplus Lines insurance policy, you must locate a surplus lines agent. These agents have extensive experience in placing business with surplus lines carriers, and can help you tailor insurance coverage to fit your needs.

Gracey-Backer, Inc. is experienced in placing Medical Malpractice policies with Surplus Lines carriers.

Barbara Gracey Backer

Barbara Gracey Backer is the Vice-President of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Professional and Personal Insurance. She may be contacted at 800-272-6055 X118 or at

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