Malpractice Resources

A.M. Best Rating- A.M. Best is a private company that determines the ratings of insurance companies. Insurance companies pay a fee to have their company reviewed by A.M. Best, this is not mandatory but encouraged in the insurance industry. Ratings can range from "A+ + (Superior) to D (below minimum standards)". Rating are based upon many components including, and most importantly, financial stability.

Captive- A captive insurance company is an insurance company that has been set up to provide coverage at a lower cost than available by going through the general insurance market. The company's stock is controlled by one interest or a group of related interests so as to provide coverage for their business operations. A captive insurance company may be a nonadmitted, nonresident, or foreign insurer.

Consent to Settle- Allows the insured to have final say in whether a claim should be settled or not.

Declaration Page- You may be asked for your current declaration page when obtaining a quote for medical malpractice insurance. This is also referred to as a "Face sheet". The declaration page includes essential information for your policy. Some of the information on a declaration page are but not limited to, Insured Name, Limits of Liability, Retroactive Date (Claims Made policy), Specialty, and Premium.

Hammer Clause- A provision that limits the insurer's liability should the insured refuse to accept a settlement offer from the plaintiff.

Loss History/Loss Run- You may also be asked to retrieve your loss history when obtaining a quote for medical malpractice insurance. This can be requested directly from your insurance carrier and is very important in the quoting process. This report will show proof to your new insurance carrier of your claim history.

Risk Purchasing Group (RPG)- RPGs are comprised of insurance buyers who band together, typically on a national basis, to purchase their liability insurance coverage from an insurance company, including a company operating on an admitted basis, a surplus lines basis, or a risk retention group. As the name implies, the RPG serves as an insurance purchasing vehicle for its members.

For both risk retention groups (RRGs) and purchasing groups (PGs), the type of insurance coverage permitted is set forth in the Liability Risk Retention Act's (LRRA's) definition of "liability," which includes all types of third party liability, such as general liability, errors and omissions, directors and officers, medical malpractice, professional liability, products liability, and so forth. The LRRA does not extend to workers compensation, property insurance, or to personal lines insurance, such as homeowners and personal auto insurance coverage.

Purchasing groups (PGs) provide advantages for their members, their insurers, and the agents/brokers who administer the group program. For PG members, the PG offers tailor-made coverage, broader coverage terms, lower rates, loss control/risk management programs, and often provides rewards for good loss experience, such as dividends in the form of credits against next year's premium. For insurers, PGs offer the ability to achieve greater profitability. For agents and brokers, PGs offer the ability to add value to transactions and retain business.

Risk Retention Group (RRG's)- RRGs are a group self-insurance plan or group captive insurer operating under the auspices of the Risk Retention Act (RRA) of 1986 that can cover all the liability exposures; general liability, errors and omissions, directors and officers, medical malpractice, professional liability, products liability of its owners. It does not extend to workers compensation, property insurance, or to personal lines insurance, such as homeowners and personal auto insurance coverage. Risk retention groups are not subject to the individual state laws that would otherwise prohibit the formation of group captives or make it difficult to form or operate them.

The Risk Retention Act is a federal legislation passed in 1986 that authorized the formation of purchasing groups and group self-insurance programs for certain types of liability exposures. According to the Act, members of risk purchasing and risk retention groups must be engaged in similar or related businesses or activities.

As insurance companies owned by their members, some of the key advantages offered by risk retention groups (RRGs) to their members relate to the control members obtain over their liability programs. This control often translates into lower rates, broader coverage, effective loss control/risk management programs, participation by RRG members in favorable loss experience, access to reinsurance markets, and stability of coverage, notwithstanding insurance market cycles

Vicarious Liability- Liability for the acts of someone else, i.e. your employees.

Please note: This information is provided to assist Insure Doctor clients in understanding insurance terminology. It should not be considered advice.