You asked if any states have imposed a requirement that insurance companies consider the employment status (e. g. , part-time or full-time) of medical professionals when determining medical malpractice premiums.

SUMMARY

No state has imposed a requirement that insurance companies consider the employment status (e. g. , part-time or full-time) of medical professionals when determining medical malpractice premiums. However, insurance companies may decide to include employment status in their underwriting criteria when calculating the amount of premium to charge an insured.

The two largest medical malpractice insurers in Connecticut, CMIC and ProSelect, offer reduced premiums for practitioners who work less than 21 hours a week and meet certain underwriting criteria. According to the companies, neither has experienced enforcement issues with regard to limited practice coverage. When completing and signing an application for insurance coverage, practitioners represent that the information supplied is true and accurate. Fabrication of work hours or failure to comply with the requirements for limited practice coverage could result in revocation of coverage.

UNDERWRITING CRITERIA

Ratemaking is the process used to calculate the amount of premium that an insured is charged. Rates must be sufficient to pay losses (claims) according to their expected frequency and severity to protect the insurance company’s financial health and solvency.

In developing rates for medical malpractice insurance, insurers generally develop an average loss experience and expected loss by specialty group. Insurers trend historical loss experience to a level expected for the current policy period using state-specific trend data. They also take into consideration investment income potential from investing premiums. To arrive at an individual’s premium, the insurer compares the applicant’s own loss experience and practice profile to the average for his area of specialty.

EMPLOYMENT STATUS

According to the National Conference of State Legislatures (NCSL), no state requires that medical malpractice insurance underwriting criteria include employment status. Underwriting guidelines are set by the insurance companies and may include a practitioners’ hours worked when setting premiums.

In Connecticut, the two largest medical malpractice insurers, CMIC and ProSelect, accept applications for limited practice coverage, defined as spending less than 21 hours per week in direct patient care. According to the companies, some specialties (e. g. , surgery) may not lend themselves to limited practice coverage because of the nature of the specialty. If the insurer finds the applicant to be an acceptable risk as a part-time practitioner given his area of practice, the limited practice coverage will be issued. It will carry a lower premium than coverage for a full-time practitioner. CMIC indicated that the reduced premium would vary by practitioner and be determined through individual underwriting. ProSelect’s limited practice coverage includes a 50% premium credit.

The Connecticut Insurance Department currently permits such premium development methodology when it is included in the required rate filings to the department.

ENFORCEMENT OF LIMITED PRACTICE REQUIREMENTS

According to the insurance department, enforcement of limited practice coverage requirements is the responsibility of the insurance companies. Neither CMIC nor ProSelect have experienced enforcement issues with regard to limited practice coverage. When completing and signing an application for insurance coverage, practitioners represent that the information supplied is true and accurate. Fabrication of work hours or failure to comply with the requirements for limited practice coverage could result in revocation of coverage.

VOLUME OF PATIENTS

According to NCSL, insurance companies in Nevada had imposed restrictions on the number of patients that practitioners could see in an effort to offer reduced premiums. For instance, a company placed a threshold on the number of babies an obstetrician could deliver. If delivering 125 babies or less in a year, one premium applied. If delivering more than 125 babies in a year, a significantly higher premium applied.

Such a restriction increased the medical malpractice crisis in Nevada. Obstetricians stopped delivering babies so that they could stay under the threshold and receive the reduced premium. As a result, Nevada passed SB 122, effective October 1, 2003, which specifically prohibits medical malpractice insurers from basing premiums for obstetricians on the number of babies delivered per year.

JB: ts