What is Medical Malpractice Insurance?
• Medical malpractice insurance is a financial-based instrument available only to physicians or those individuals involved in healthcare. By purchasing a medical malpractice policy, the physician or medical professional is protected in the event of a judgment against them for medical negligence, malfeasance, or in general malpractice.
• The majority of states in America require that physicians have some form of medical malpractice insurance to protect them from a faulty or negligent action. In addition to a state mandate, the majority of hospitals or medical institutions will require physicians to be obtain a form of coverage—institutions will require the obtainment of a policy to protect them against costly settlements.
How Medical Malpractice Insurance Works
• A physician will purchase a medical malpractice policy from either a commercial insurance company or a mutual insurance company that is operated by a health care provider or medical professional. The physician can either choose individual coverage or be a part of a policy that incorporates the underlying practice or institution in which the doctor is employed.
• The form of coverage purchased is dictated by the individual physician’s employer. Those doctors or medical professionals employed by the United States Federal Government will not be required to purchase a medical malpractice insurance policy—any lawsuit against the federal government is self-insured.
How is the Medical Malpractice Premium Determined?
• The majority of physicians are rarely sued or sued infrequently. As a result, the data attached to a premium calculation is actuarially unsound. This characteristic makes it impossible for a physician to be “rated” or “classified” based on past history. In addition, the claims filed against a doctor are based on circumstance, making the issues concerning with a premium determinant difficult to gauge.
• As oppose to past histories, the premiums associated with medical malpractice insurance are determined based on specialty. All physicians are classified based on their medical field or their specialty. Each classification is attached to a rate based on the probability of an occurrence of a medical malpractice issue. For example, orthopedic surgeons are more susceptible (as a result of the skill required to perform surgery) to negligent actions or mistakes, and as a result, are more likely to face a medical malpractice suit. As a result of this general susceptibility, orthopedic surgeons will face higher premiums for their medical malpractice insurance policies. In addition, the location of the physicians or medical professionals practice, will affect the premium level.
• As a result of the rising number of medical malpractice cases, insurance companies are realizing that the business of offering medical malpractice insurance is not indisputably profitable. This realization has increased premiums and placed a strain on the medical field.