Denied Malpractice Insurance? What to Do Next

Byislandinsurancegroup

Being declined for medical malpractice insurance can feel like a verdict. It is not.

A denial generally means that your risk does not fit a particular carrier’s current underwriting guidelines. It does not necessarily mean that every insurance company will reach the same conclusion.

Depending on your specialty, claims history and circumstances, coverage may still be available through another admitted carrier, a specialty program or the excess and surplus market.

Here is what a malpractice insurance denial means—and what to do next.

Why Malpractice Insurance Carriers Decline Physicians

Many physicians begin with an admitted insurance carrier. Admitted carriers are licensed and regulated by the state and generally operate under filed rates, policy forms and underwriting guidelines.

When something falls outside a carrier’s guidelines, the carrier may decline the application instead of offering modified terms.

Common reasons include:

  • A paid malpractice claim or settlement
  • An open lawsuit with an uncertain outcome
  • Multiple claims within a short period
  • A large open claim reserve
  • A board complaint or disciplinary action
  • A suspended, restricted or previously inactive license
  • A high-risk specialty or procedure
  • A gap in prior coverage
  • Incomplete loss history
  • A policy cancellation or nonrenewal
  • A material change in practice operations
  • Telemedicine or multistate practice concerns
  • Work at facilities that do not meet the carrier’s requirements

These factors are not automatically disqualifying in every market. They may simply fall outside one carrier’s appetite.

Step 1: Find Out Why You Were Declined

Do not immediately submit the same application to every available carrier.

First, ask the agent or carrier why the risk was declined. The answer may identify a problem that can be corrected before another submission is made.

For example:

  • The carrier may be missing a loss run.
  • An application response may be incomplete.
  • An old claim may still appear open.
  • The underwriter may need a claim narrative.
  • The application may describe procedures inaccurately.
  • A licensing issue may require additional documentation.
  • The carrier may simply no longer write your specialty.

A market-appetite decline is very different from a decline based on incomplete or inconsistent information.

Understanding the reason helps determine the next market and prevents the same problem from following the application.

Step 2: Do Not Wait Until Your Policy Expires

The greatest danger after a denial is not necessarily the denial itself. It is allowing the situation to create a coverage gap.

Practicing without appropriate professional liability insurance may:

  • Expose your personal and business assets
  • Violate an employment agreement
  • Create hospital-credentialing problems
  • Violate a lease or facility contract
  • Concern future underwriters
  • Leave you responsible for defense expenses
  • Disrupt your ability to continue practicing

Begin the replacement process as soon as you receive a nonrenewal notice or indication that your current carrier will not continue coverage.

If your existing carrier declined to renew your policy, review our guide on what to do when your medical malpractice renewal is declined.

Step 3: Determine Which Insurance Market Fits the Risk

A denial from one admitted carrier does not prove that the entire admitted market is unavailable.

Depending on the circumstances, another admitted carrier may have different underwriting guidelines or greater appetite for your specialty.

Possible placement options include:

Another admitted carrier

This may be possible when the denial resulted from a carrier-specific guideline, geographic restriction or change in specialty appetite.

A specialty malpractice program

Some programs focus on particular healthcare professions, procedures, practice models or claims-history profiles.

The excess and surplus market

Excess and surplus carriers—commonly called E&S or non-admitted carriers—can often evaluate risks that do not fit standard-market guidelines.

E&S underwriters may have greater flexibility to examine the physician’s entire history and price the risk individually. These carriers are usually accessed through a retail insurance agent working with a licensed wholesale broker.

Our guide to medical malpractice insurance with prior claims explains how claims-history risks are evaluated and placed.

Physicians who have been declined by multiple markets should also review our guide to hard-to-place medical malpractice insurance.

Step 4: Request Complete Loss Runs

Most serious malpractice submissions require current loss runs from every carrier that insured you during the requested period—commonly five to ten years.

Loss runs generally show:

  • Reported claims
  • Incident dates
  • Claim status
  • Amounts paid
  • Defense expenses
  • Open reserves
  • Policy periods
  • Whether each matter is open or closed

Request them immediately. Prior carriers and brokers may take time to produce the records, and an incomplete loss history can stop underwriting.

If a loss run contains incorrect information, request clarification or correction from the issuing carrier. Do not alter the document yourself.

Step 5: Prepare a Factual Claim Narrative

Loss runs provide numbers and dates, but they rarely explain the complete situation.

For each significant claim or incident, prepare a concise narrative addressing:

  • What treatment or procedure was involved
  • Your role in the patient’s care
  • What was alleged
  • The current status
  • The outcome, if known
  • The amount paid or reserved
  • Whether other providers were involved
  • What changed in your practice afterward

Risk-management changes may include:

  • Updated informed-consent procedures
  • Improved documentation
  • Additional patient screening
  • Revised follow-up protocols
  • New referral criteria
  • Additional training
  • Changes in staffing or supervision
  • Discontinuation of a particular procedure

Keep the narrative factual and consistent with the official claim record. Do not attack the patient, blame codefendants or speculate about the final outcome of an open case.

Step 6: Check the Entire Application for Consistency

Underwriters compare the application against loss runs, licensing records and other documents.

Inconsistencies can be more damaging than the underlying claim.

Before submitting, verify:

  • Every claim has been disclosed.
  • Dates are consistent across the application and loss runs.
  • Practice locations are accurate.
  • All procedures are disclosed.
  • Patient volume is reasonable and supportable.
  • Previous cancellations and nonrenewals are explained.
  • Board actions and investigations are answered accurately.
  • The requested retroactive date is correct.
  • All entities and providers requiring coverage are listed.

Never hide a claim because you believe it was minor, defensible or unrelated to your current practice. A truthful difficult submission is more insurable than an application that appears incomplete or misleading.

Step 7: Protect Your Prior Acts

If you are leaving a claims-made policy, replacing the current policy is only part of the problem.

You must also determine how claims arising from earlier patient care will be handled.

Possible solutions include:

  • Prior-acts coverage from the replacement carrier
  • Tail coverage from the former carrier
  • Employer-provided tail coverage
  • Another contractual arrangement

Tail coverage—formally known as an extended reporting period—may allow qualifying claims to be reported after a claims-made policy ends.

Do not cancel the existing policy until the retroactive date and prior-acts arrangement have been reviewed.

Read our guide to medical malpractice tail coverage for physicians.

Step 8: Work With an Agent Experienced in Difficult Risks

A difficult malpractice submission requires more than forwarding an application to the first carrier available.

An experienced agent should:

  • Identify the reason for the previous decline
  • Organize the underwriting documents
  • Review the application for inconsistencies
  • Prepare the submission for the appropriate markets
  • Work with wholesale brokers when necessary
  • Respond to underwriting questions
  • Compare more than the premium
  • Protect the requested retroactive date
  • Explain important policy differences

Those differences may include:

  • Claims-made versus occurrence coverage
  • Defense costs inside or outside the limit
  • Consent-to-settle provisions
  • Deductibles
  • Exclusions
  • Retroactive dates
  • Tail options
  • Shared versus individual limits
  • Entity coverage
  • Regulatory-defense coverage

The cheapest option is not necessarily the best option—especially after a denial.

What to Gather Before Requesting Another Quote

Prepare the following documents:

  • Completed malpractice application
  • Current curriculum vitae
  • Current policy and declaration pages
  • Five to ten years of loss runs
  • Claim narratives
  • Nonrenewal or denial notice
  • Medical license information
  • Board-certification information
  • Procedure and patient-volume details
  • Hospital or facility affiliations
  • Risk-management documentation
  • Any supplemental forms requested by underwriting

A complete submission reduces delays and gives the underwriter a clearer basis for considering the risk.

A Denial Is a Routing Problem, Not Necessarily the End

A medical malpractice insurance denial means the original carrier was unwilling or unable to offer coverage under its guidelines.

The next step is to identify why, correct any incomplete information, gather the necessary documentation and approach carriers that are appropriate for the actual risk.

Do not wait until the expiration date, and do not submit an incomplete application to multiple carriers. A rushed submission can create additional declines and make the account more difficult to place.

Want an initial estimate before speaking with an insurance professional?

MedicalMalpracticeQuote.com asks a few questions about your specialty, location, limits and claims history. It provides a confidential estimated premium range as a starting point—not a binder, guaranteed offer or formal insurance quote.

Try the free medical malpractice estimate tool at MedicalMalpracticeQuote.com

For assistance reviewing a denial or exploring replacement coverage, contact Island Insurance Group.

Coverage is subject to underwriting approval and the terms, conditions, limitations and exclusions of the policy issued. This article provides general educational information and does not guarantee that coverage will be available.

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