Medical malpractice insurance is a requirement for doctors to be able to practice medicine. Even if a state does not require malpractice insurance, it is still needed in order to obtain privileges to see patients in a hospital. Malpractice insurance, just like other types of insurance, is regulated by each state, which can set its own requirements and guidelines. However, doctors are facing increasing insurance premiums that are causing them to make significant changes to cope with the rising costs.
- Most states require doctors or physicians to purchase liability or malpractice insurance. There are also doctors, in states such as Florida, who may decide to not purchase insurance, a practice known as "going bare." Insurance for doctors or physicians is purchased from an insurer that provides commercial policies or a mutual company that is physician-owned. Hospitals that employs physicians will purchase a policy that covers the hospital and staff.
- The premiums that are charged for malpractice insurance are determined by an insurance company using a variety of factors. One factor that is used includes the payout from an insurer for a particular risk group of providers. Another factor is that insurers may not know the exact risk experience from specific groups. Insurers also consider their expenses to administer these policies, any investment income received as well as their own loss experience and profit requirements.
- The availability of malpractice insurance is one reason why there are few options available for doctors to obtain coverage. The decline in the availability of malpractice insurance can result from many factors. This includes a tightening of underwriting criteria by insurance companies as well as not writing any new policies. Insurance companies also may non-renew a policy when a doctor files a claim or picks only preferred risks when issuing a policy.
- Malpractice costs that continue to rise are causing various problems to patients, doctors and insurance companies. One problem is that insurance companies can start to pay out more in claims than they receive from premiums. This has led to a decrease of the availability of malpractice insurance in some areas as insurers have exited the market. As a result, insurers that remain increase the premiums paid by doctors for coverage.
- The regulations of malpractice or liability insurance are primarily left to individual state laws and mandates that are required. Most state Departments of Insurance regulate the rates used by insurers to make sure they are not unfairly high. Unfortunately, each state has its own regulation requirements for insurance rates, which explains why prices are higher for malpractice insurance in some states than in others.
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