Welcome to Understanding CRNA Malpractice Insurance. First, the standard disclosures. I do have a financial relationship to disclose. I am the Director of AANA Insurance Services, which is a wholly owned subsidiary of AANA. I will not discuss off-label use during my presentation. While we will discuss many topics, two of the key outcomes from this presentation are 1. To understand the differences between occurrence and claims made insurance and 2. To identify the differences between admitted and non-admitted insurance companies. To start with, let's ground ourselves with some average CRNA claims data. The average cost of a CRNA non-dental malpractice claim is around $350,000, while the average legal expense to defend a CRNA claim is around $43,000. 82% of all claims are closed without any payment to a plaintiff or a patient. When you purchase an insurance policy, you are entering into a contract. I would like to highlight a key provision you will want to make sure is contained within your policy. The Consent to Settle Clause is key to you having a voice in how a claim will impact your reputation and also your future insurability. MedPro policies have a pure consent to settle that simply says, the insurance company will not settle any claim without your consent. Other insurance policies may appear to have a consent clause, but if you read closely, you will discover that it has a severe financial risk if you do not accept their proposed settlement that they have negotiated on the side with the plaintiff's attorney or the patient. You might ask yourself, if I paid this company premiums, why are they negotiating without me? The answer to that is to save the carrier money, potentially at the expense of your reputation. In the insurance world, we call this the Hammer Clause or Consent to Settle with a Hammer Clause. You may be familiar with insurance limits on your auto policy or home or renter's insurance, which determines the amount of money your policy will pay in the case of a claim. The next few slides will explain malpractice limits and how they are applied in specific claim situations. A per-occurrence limit is the maximum an insurance company will cover per individual claim. Anything over this maximum amount would be the responsibility of the policyholder to pay. In the examples on this slide, the first example shows a policy with a per-occurrence limit of $100,000. If a claim was settled against this policy in the amount of $63,000, the insurance company would pay the entire $63,000. In the second example, also with a per-occurrence limit of $100,000, if the claim settled in the amount of $107,000, the insurance company would only pay $100,000 or an amount equal to the per-occurrence limit. The additional $7,000 would be the responsibility of the policyholder to pay. The aggregate limit of an insurance policy represents the total claim costs an insurance company will cover during the entire policy period, which is typically one year. In the examples below, the policy in question has a per-occurrence limit of $100,000 and an aggregate limit of $300,000. In the first example, a claim is settled in the amount of $63,000. Since that is less than the per-occurrence limit of $100,000, the insurance company would pay the entire $63,000. That amount would then be deducted from the $300,000 aggregate limit, leaving $237,000 left to pay for future claims made against this policy. In the second example, a claim is settled in the amount of $107,000, for which the insurance company would pay $100,000, as this is limited by the policy's per-occurrence limit, as shown on the prior slide. This would further reduce the aggregate limit by another $100,000, leaving $137,000 left to pay for future claims made against this policy. Medical malpractice reform, also known as tort reform, includes state strategies to limit medical malpractice costs, deters medical errors, and ensures that patients who are injured by medical negligence are compensated. Certain states have usual and customary liability limits, which are what a carrier would typically provide in these jurisdictions. As shown in the chart below, Florida, Michigan, and Texas have lower-than-average usual and customary liability limits when compared to the rest of the United States, which typically provides policies with limits of $1 million occurrence and $3 million aggregate. If a provider or practice renders services in a state that has a patient compensation fund, PCF, special care and consideration must be taken to ensure that coverage is adequate. Some PCF states require mandatory participation in their patient compensation fund. A PCF will typically have an underlying limit requirement, above which the fund provides excess coverage if the insured has met the limit requirement on their policy. Each PCF also has its own unique rules governing who can enroll, whether individual limits are required, and if defense costs can erode the policy liability limit. As an insured participating in a patient compensation fund, you must pay a surcharge that contributes to the state fund to allow for payment of losses exceeding the underlying limits required. This allows the state to pay out valid claims. The table below shows various limit requirements for a selection of PCF states. Insurance policies are written on an occurrence or claims-made basis. The basis of a policy determines which claims are and are not covered by a policy. The difference between these has to do with the timing of the claim, or more specifically, the timing of the event that led to the claim and the timing of the resulting claim for damages made against the insured. An event refers to a wrongful act, event, incident or accident, or error that caused harm to a third party. A claim refers to the written demand made against the insured for causing harm to a third party. Both the event and the claim can occur during or outside of the policy period, and the basis of the policy determines whether a particular policy will cover a claim made against the insured. For occurrence policies, the trigger is when the service was rendered. By the time the claim comes in, the terminology changes to the incident, which means when the alleged service was rendered or failed to be rendered that may have led to the alleged injury. A simpler way to say this is that for a claim to be covered on an occurrence policy, the policy must be active when the act or incident occurs, even if that act or incident occurs years after the policy has expired. To better understand occurrence forms, let's look at a simple claims example. In this example, the policy period runs from January 1, 2020 to January 1, 2021. If the incident or service took place on August 28, 2020, but the claim was not reported until June 3, 2021, the claim would still be covered because the incident or service occurred during the policy period. Let's now discuss claims made coverage. For a claim to be covered under a claims made policy, two requirements must be met. First, the incident must occur during the policy period, but second, the claim must also be reported during the policy period. If you remember, an occurrence form only required the service or the incident to occur during the policy period, but in its most basic form, claims made coverage requires both the service to be rendered during the policy period and the claim be reported during the policy period. Let's revisit the same claims example we used earlier, but this time from a claims made perspective. To refresh your memory, in this example, the policy period runs from January 1, 2020 to January 1, 2021. If an incident or service occurred on August 28, 2020, but was not reported into the insurance company until June 3, 2021, under a claims made policy, this claim would not be covered. Even though the incident occurred during the policy period, it will not be covered because it was not reported until after the policy expired. Alternatively, if you remember our occurrence example, this claim was covered, as the only requirement under an occurrence policy is when the incident occurred. After our comparison of claims made and occurrence coverage, you might ask yourselves why claims made coverage would be requested. One reason is that for some professions, claims are not reported immediately. Medical malpractice coverage is a great example of this. A second reason is as the likelihood of reported claims increases, so does the claims made age step premium. Said in other terms, the longer you have continuous claims made policies, the more likely you are to have reported a claim and your premium will increase accordingly. Finally, insurance companies like claims made coverage because it allows them to more easily predict losses because coverage must be triggered before the policy expires or you as the policy holder lose your limits. In other words, your claims made limits are no longer available once the policy expires. Furthering the previous slide, this chart shows that for medical malpractice, claims are often not reported until two years or more from the incident. In fact, only approximately 31% of claims are reported within the first year after the incident occurs. The remaining 69% are reported between two and five years from the incident occurring. This slide illustrates how claims made step premiums increase from year to year. In this example, we will take the state of Ohio. We will assume the company issuing the policy is medical protective and the type of policy is a full-time self-employed CRNA. The policy limits are 1 million, 3 million. You will see the first year's premium is $4,370, but as subsequent policies are purchased, the premium increases. By the time the fifth year policy is purchased, the premium has increased to $7,945. The reason that this happens is that the insurance company is taking on a larger likelihood that a claim will be covered due to what is called a retroactive date, which I will explain on the next slide. A retroactive or retro date is the date that is set when you purchase your first claims made policy or when you purchase a claims made policy from a new insurance provider. The retroactive date determines how far back in time an incident can occur for it to still be covered by your current policy. If you recall from an earlier slide, for coverage to be provided under a claims made policy, both the incident must occur during the policy period as well as the claim also being made during the policy period. However, the retro date extends coverage historically to allow for claims resulting from incidents occurring before the policy effective date. If you are purchasing a claims made policy for the first time, your retro date will match your policy effective date. However, if you had other claims made policies previously from a different insurance provider, you can request the new insurance provider institute a retro date matching the earliest date from which you had continuously active claims made coverage. An example, if I buy my first medical malpractice policy from Carrier A, this policy is effective January 1st, 2015, and I renewed it annually until a policy expired on December 31st, 2020. If I buy a new policy from Carrier B, effective on January 1st, 2021, I can request they make my retro date be January 1st, 2015, which matches the earliest effective date from my prior carrier. This allows my policy from Carrier B to cover claims resulting from incidents that occurred between January 1st, 2015, and December 31st, 2020, when my coverage was provided from Carrier A. Hence, even though I have switched to Carrier B, they will still provide coverage for the time when I was insured by another insurance provider. The opposite of a retro date in many respects, an extended reporting period endorsement, also known as tail coverage, provides coverage for claims that are reported after your policy has expired. This endorsement allows you to report a claim for a period of time after your claims made policy has expired. If you remember, for a claim to be covered under a claims made form, both the incident must occur during the policy period and the claim be reported during the policy period. However, as an earlier slide showed, many medical malpractice claims are not reported until two years or more after the incident. So, to ensure coverage in the case of, for example, your retirement as a CRNA, you must purchase tail coverage from your provider that will allow you to report claims after your final policy has expired. There is a cost associated with this, and examples of this will be provided on the next slide. Carrying forward the example from an earlier slide, for a policy based in Ohio issued by Medical Protective for a full-time self-employed CRNA with limits of $1 million, $3 million, this table shows you the cost for tail coverage for various scenarios. In the first line, for a one-year claims made policy with an initial policy premium of $4,370, the cost for a tail is also $4,370. If you have had a fifth-year claims made policy, your original policy premium would be $7,945, and again, the tail coverage would be 100% of that or an additional $7,945. Premiums for occurrence policies are higher than for claims made policies, given that they provide additional flexibility for you to report claims for a longer amount of time after the policy has expired. As such, the premiums for an occurrence policy are typically about 2% higher than for a fifth-year or mature claims made policy. In the example below, again in Ohio, the fifth-year claims made policy premium is $7,945 for an annual policy term. For the same annual policy term, the estimated occurrence premium would be $8,104, which is about $159 higher. For the additional premium, however, you would gain additional time to report any claims that resulted from incidents that took place during the policy period. This slide presents a different way to look at claims made coverage. The total cost to obtain one year of claims made coverage, including the initial policy for a premium of $4,370, and also the purchase of a tail for an additional $4,370, which allows you to report incidents after the policy has expired, results in a total premium of about $8,740. If you recall from the earlier slide, the estimated cost of an occurrence policy for the same term was $8,104, which actually results in a savings of $636. This is due to the occurrence policy allowing you to report claims for a longer period of time, whereas with the claims made policy, you must purchase a tail to be able to report claims after the policy has expired. The difference between claims made and occurrence becomes even more pronounced when you take into account additional years of coverage. This table shows the total cost for three consecutive years of claims made coverage. Three years of premium, combined with one tail premium charge, equals a total of $25,822 for three years of claims made coverage. The same three years of occurrence coverage would cost about $24,312, which shows a savings of $1,510 as compared to the claims made coverage. And finally, to compare the total cost for five years of coverage, we first take claims made coverage. As the table shows, the total for five consecutive years of claims made coverage, including the purchase of a tail after the fifth year policy has expired, is $42,030. If we look at the estimated occurrence cost for the same five years, it's $40,520. The savings, again, is $1,510, resulting in a savings by purchasing five consecutive occurrence policies, which also allows additional time to report claims resulting from incidents occurring during any of those five policy years. If you are looking to purchase a new insurance policy and are comparing the premium charge for claims made with the charge for occurrence, it might appear that the claims made policies are significantly less expensive. However, as we have discussed on earlier slides, when factoring in the need to purchase a tail coverage, that is not the case. This table shows the comparison between a first year claims made policy for various states with an occurrence policy for the same factors for the same states. It does appear that claims made coverage is significantly less, but when you factor in the need to purchase a tail, that difference goes away. When you are applying for insurance, please keep this in mind. You will not see the price of a tail coverage from most insurance providers. That will only be discussed when the policy expires, but it is a factor that you should keep in mind when purchasing because, as we discussed, many medical malpractice claims are reported two years or more after the policy expires, necessitating you to purchase tail coverage when your policy has ended. One factor to take into account when deciding an insurance provider is the viability of that provider. Another way to say this is, in some cases, premiums can be too cheap. If we take a situation where I, as an insurance company, issue a series of policies with $1 million limits, I charge an average premium per policy of $2,500. I would need to issue 400 of those policies in order to cover only one policy limits claim of $1 million. However, after issuing those 400 policies, I actually have $400 million of total limits outstanding. So, while I have the ability to cover one policy limits loss, I have the ability to pay no additional claims using just the premium generated from those 400 policies. The previous few slides have shown the many advantages of occurrence policies. To summarize here, the first advantage, number one, is simplicity. Occurrence policies don't have retro dates, they don't have tails, you purchase a policy, and you know that you have coverage for that entire year regardless of how long it takes any potential claims to be reported. As mentioned, there's no need to buy a tail. As shown on earlier slides, occurrence, although initial impressions might differ, are actually less expensive than purchasing the similar coverage with a claims made policy when factoring in tail coverage. And finally, with occurrence policies, you receive a new set of limits each policy year. This will be further described on the next slide. Another way to compare claims made in occurrence policies is to look at the available limits of liability over a longer period of time. As this slide shows, if I purchase five consecutive occurrence policies, I am given five separate occurrence and aggregate limits. So, if coverage lasts from 2020 to 2025, each annual policy term, I'm given a limit of one million occurrence and three million aggregate. This is compared to claims made where if I purchase five consecutive policy terms, they in essence share one set of one million, three million limits for those five years, resulting in far less coverage to pay claims. One important consideration related to your insurance is who purchases it. If you're applying for a position as a CRNA, does your employer provide coverage or are you expected to purchase it yourself? Do you moonlight? If so, you would need to purchase your own insurance. Once you determine that you must purchase your own insurance, the next question you must ask is, what is the right policy for me? There are many different types of medical malpractice coverage available for CRNAs, including moonlighting coverage. Moonlighting coverage would apply when you have insurance coverage through your facility for your primary job, but you need your own coverage for work that you perform outside of your employer. There are different options of moonlighting policies available based on the number of annual hours you work per year. Part-time policies would apply for CRNAs who are not covered through their facility and who work less than 1,000 hours per year, whereas full-time policies would apply for CRNAs not covered through the facility who work more than 1,000 hours per year. Group policies are available and are specifically tailored for group coverage. These address concerns such as vicarious liability and corporate entity coverage. Finally, a supplemental policy applies if your policy is provided by your employer, but you would like to supplement that coverage with your own policy. In addition to the type of policy, you also need to ask yourself certain questions about the insurance company you purchase your coverage from. Will you be insured by an admitted insurance company? We will discuss this on the next slide. Does your insurance company have a good rating from AMBES? Do you have occurrence coverage or claims made coverage? If you have claims made coverage, do you have the opportunity to buy an unlimited tail to provide coverage after your policy has ended? We will discuss three main types of insurance companies on the following slides. Admitted insurance companies, non-admitted or surplus lines insurance companies, and risk retention groups, also referred to as RRGs. Purchasing your insurance through an admitted carrier provides several advantages. First, it means that the insurance company has met regulations set by the State Departments of Insurance. This regulates your insurance this regulatory oversight ensures accountability to governmental regulations and customer protections that are in place. Second, if you obtain your insurance from an admitted carrier that becomes insolvent, there could be a state guarantee fund available in that state that would help pay claims that your former carrier would not be able to meet as a result of their insolvency. Also, admitted policies typically have the broadest coverage forms available, as in most cases, they must be approved by the State Departments of Insurance. And finally, admitted coverage from some carriers offers the ability to purchase unlimited tail coverage for a claims made policy. This ensures your claims made coverage will continue to cover claims that occur after your policy expires. Purchasing insurance from a not admitted or sometimes called surplus lines carrier has both advantages and disadvantages. One potential benefit is that they provide coverage for applicants who were denied coverage through the admitted market. This can happen for a variety of reasons that will be discussed on the next slide. Not admitted policies also have more flexible underwriting guidelines as their coverage forms and premium rates are not approved by the State Departments of Insurance, allowing the company to deviate to provide coverage and price more customized to an individual applicant. One disadvantage of a not admitted carrier could be reduced coverage as compared to an admitted counterpart. Each not admitted carrier and policy type has its own complexities and must be carefully examined on an individual basis. In comparison, admitted policies are more standardized as carriers cannot change them without officially filing change requests with the State Departments of Insurance. In order to purchase not admitted or surplus lines coverage, an applicant must have been rejected from purchasing admitted coverage first. There are several reasons why someone might be denied coverage, including having a claims experience that reflects a breach in standard of care, previous substance abuse issues, or issues with their medical license. Risk retention groups, or RRGs, are member-owned liability insurance companies. This concept allows companies to pool their risks together for self-insurance without purchasing through the admitted or non-admitted market. In some cases, while in others, RRGs are set up and administered by traditional insurance companies who might also offer admitted and non-admitted products. RRGs have several disadvantages, including no regulatory oversight. Admitted carriers must file their rates and forms through the State Departments of Insurance. RRGs do not. RRGs also do not contribute to state guarantee funds, so if an RRG becomes insolvent, their members will be responsible for paying all claims. RRGs also offer no consent to settle provision. They offer limited tail coverage. They can also change their premiums at any time. Finally, member companies are often ones that share homogenous exposures due to the fact that most members and owners are most likely in the same industry. As such, a loss trend that affects one member will quite likely affect all members and can quickly cause losses to snowball and drastically affect the financial health of the RRG in some cases. One consideration to take into account when purchasing insurance is the financial strength or the rating of the insurance company. When you give your premium dollars to an insurance company in exchange for your policy, you are paying for a guarantee that the company will pay any claims that are covered by the policy. However, if the company is insolvent, there is a potential that these claims will not be paid. While admitted policyholders may have a state guarantee fund that they can rely on, non-admitted policyholders do not, and they would be on the hook for all claims that occurred after their carrier became insolvent. While you could do your own research on the financial strength of an insurance company, AMBEST, a national rating agency, who per their website provides a rating that gives an independent opinion of an insurer's financial strength and ability to meet its ongoing insurance policy and contract obligations, can also do the work for you. AMBEST was founded in New York in 1899 as the world's first credit ratings agency. Its entire focus is on the insurance industry, and it assigns ratings to insurance companies of all sizes in all countries to help consumers gauge the financial health and other measurements of an insurance company's viability. AMBEST is independently owned outside of the insurance industry and has been a recognized industry leader since its founding. AMBEST assigns a letter score to rate insurance companies based on their ability to meet ongoing insurance and financial obligations. Ratings range from the highest, superior, A+, or A++, through the lowest rating of D, which represents vulnerable. As an example of an AMBEST rating, Medical Protective Insurance Company, the carrier that AANA currently partners with, has a rating of A++. The National Practitioner Data Bank, or NPDB, is a web-based repository of reports containing information on medical malpractice payments and certain adverse actions related to healthcare practitioners, providers, and suppliers. It was established by Congress in 1986 and is a workforce tool that prevents practitioners from moving from state to state without disclosure or discovery of previous damaging performance. Payments made by any professional corporation or business must be reported to the NPDB and the failure of the report may result in a $10,000 fine. If you are employed, I would recommend pulling yourself your NPDB report, similar to the way you would do for your FICO score. As we begin to wrap up, I would like to give you a couple of considerations regarding claims and expenses surrounding claims. More than 90% of all medical malpractice claims are settled out of court. Your indemnity losses will be reported to the National Practitioner Data Bank and as a reminder, a failure to report $1 or more in indemnity payment to the NPDB will result in a $10,000 fine. The average deposition expense associated with a claim is about $2,600 and the average Board of Nursing legal expense around $4,100. Both of those expense figures are courtesy of MedPro claims information. You always have a choice where to purchase your insurance, but please keep in mind certain questions that you should ask when doing so, such as, am I insured by an admitted insurance company? Does my insurance company have a secure rating from AMBES? What type of policy form do you use, occurrence or claims made? And if I have claims made coverage, will I have the opportunity to buy an unlimited tail when my policy expires? Please scan this QR code to find additional resources from AANA Insurance Services. AANA is here when you need us. The AANA Helpline wallet card puts help for alcohol or other drug concerns at your fingertips. Please visit store.aana.com and click on free member resources to request yours today. In addition, please visit aanawellness.com to find resources to support all aspects of personal and professional well-being. Our objective is to support your overall well-being as well as help you navigate challenges, including substance use disorder, stress, depression, care fatigue, adverse events, student wellness, and workplace wellness, amongst others. Thank you for listening to today's presentation. I will leave you with one final note, a benefit that we offer to AANA members and policyholders, our MedMal 101 student presentation. These presentations last approximately one hour and are hosted by three alternating members of our senior underwriting staff. Each consists of a presentation similar to the one provided here today and a question and answer session at the end for students to pose any questions they might have. Please see contact information on the screen to request yours today. Thank you for your time and I hope you have a wonderful day.

CRNA malpractice insurance

Occurrence vs. claims-made insurance

Admitted vs. non-admitted insurance companies

Consent to Settle Clause

Tail coverage

Occurrence policies

Financial strength of insurance companies