The purpose of medical malpractice insurance is to defend a Florida physician or surgeon in the event of a claim and to pay a judgment if necessary. It is vital that a Florida physician or surgeon choose a medical malpractice insurance company that is financially strong—not only now but also down the road when he or she retires. Probably the most important consideration in choosing a medical malpractice insurance company in Florida is its financial strength, not the price of the premium. It is essential that the company have sufficient financial resources to pay all current and future claims against policyholders. “There’s no set of attributes that a malpractice insurance company can possess, no matter how wonderful, that can make up for insolvency”, says Richard E. Anderson, chairman and CEO of The Doctors Company, a leading physician-owned medical malpractice insurer.
The consideration of financial stability is well illustrated by the failure of many medical malpractice insurance companies in the late 1990’s, when thousands of physicians lost millions of dollars in uncovered premiums. Medical Malpractice claims went unpaid. Doctors lost hospital privileges. Some Florida physicians and surgeons were unable to purchase malpractice insurance policies from the remaining standard carriers and were forced into the Florida Medical Malpractice JUA, a company normally reserved for high-risk doctors. Chaos ensued. To avoid this fate in the future, it is important that a Florida physician or surgeon look not only at the cost of medical malpractice insurance, but, more importantly, at the financial health of the insurance company.
The best place to research the financial stability of your malpractice company is with the insurance rating agencies, A.M. Best & Co., Fitch Rating, Demotech and Standard & Poor’s. The rating bureaus offer an assessment of the malpractice insurance company’s ability to pay future claims. If possible, a financial rating of A- or better is preferable. A doctor should also ask around for any rumors on the street that a malpractice insurance company might be in shaky financial shape. Their malpractice insurance agents or brokers are an excellent source of “gossip”, as they have their ears to the ground every day about the health of the companies they represent.