Insurance pools become polluted when higher risk professions are allowed to be grouped with your group. Here are a few examples of how some pools have been polluted and professional liability insurance premiums are rising quickly:
Medical naturopaths have joined the traditional naturopath insurance pool. Unfortunately, botched minor surgeries, errors in diagnosis and prescribing medication have resulted in large claims against medical naturopaths. Insurance rates are rising quickly. The insurance industry refuses to change the current naturopath risk pool. Therefore, traditional naturopaths are paying for the negligent errors performed by medical naturopaths. The higher paid professionals benefit at the expense of lesser paid naturopaths.
Poorly trained biofeedback practitioners are being taught how to diagnose, prescribe, counsel and treat their clients -- they call them "patients." Poor training and paper mill certification always results in unwanted claims. All biofeedback practitioners are paying, and will continue to pay, higher malpractice insurance premiums until this changes. In the insurance industry these kinds of changes are always slow to happen. Poorly trained professionals benefit at the expense of well-trained biofeedback professionals.
Most homeopaths are trained to diagnose, prescribe remedies, treat their client with homeopathic remedies and other interventions. Legally in all fifty states this is practicing medicine without a license unless the homeopath is licensed by her or his state. Once the homeopath is ordered to cease and desist medical investigators start interviewing their clients. If the homeopath is resistant to pleading guilty, some of their clients are convinced to file malpractice claims against them. This is getting to be a problem and malpractice insurance premiums for homeopaths are rising. The rest of the problem is the number of professional homeopaths is decreasing.
Issue #2 Insurance Profits are Escalating
When the large banking interests started buying and taking over insurance companies, they changed the way insurance premiums were handled. Under the old system fifty percent (50%) of all dollars paid for insurance premiums went into the risk pool to pay claims, twenty-five to thirty percent (25-30%) went into employee salaries and benefits, and the remaining twenty to twenty-five percent (20-25%) paid for the overhead and generated about eight to twelve percent (8-12%) profits for the shareholders and executives.
Under the new system twenty to thirty percent (20-30%) of all premium dollars goes to the top executives and another ten to twenty percent (10-20%) is earmarked for profits. In other words about forty cents on each premium dollar goes to a few people at the top. About thirty percent (30%) pays the employees and their benefits and thirty percent (30%) is used to pay claims.
In some cases the company still places fifty percent (50%) of all premiums in the escrow account for claims and then pays sixty percent (60%) of those moneys to in-house counsel, advisors, experts and executives "overseeing and managing" these funds.
The point is more money from premiums is being used to pay top executives and shareholders instead of claims.
This creates some serious problems:
1) Claims are denied and very few people have the resources to fight the insurance company -- especially since the company makes the final decision about paying claims.
2) Claims are discounted, or dragged out so long plaintiffs lose interest, get panicked and settle for pennies on the dollar or die.
3) Employees are overworked, underpaid, undervalued and fired before their benefits kick in.
4) Profits are more important than people -- executives are "gods," and not "real" people.
5) The cost of insurance increases in order to pay unpaid claims and executive salaries, bonuses and benefits. The truth is professional insurance prices are increasing very rapidly during 2012.
Issue #3 New Exclusions and Conditions
The number of items excluded from coverage in both professional and general liability insurance policies is increasing. This means there are fewer claims for the company to pay on your behalf. But this is only a small part of the problem.
The major issue here is how you define the exclusion. Companies are using more general terms for their exclusion definitions. What that means is the company can exclude things everybody thought were covered by the policy.
In some professions -- if you actually read and understand the policy -- you realize that just about everything you do is not covered. You're paying the insurance company for nonexistent coverages.
The number of conditions that must exist for the company to be responsible is also increasing. Some conditions in some of the newer policies require you to do things you would never consider doing. But if you didn't do those things, the coverage you thought you bought is null and void.
These new exclusions and conditions are designed to increase insurance company profits. The older exclusions and conditions were designed to protect you and your clients.
Things in the insurance industry are changing and most insurance experts think these changes benefit the shareholders and company executives at the expense of the policy owners.
The Bottom Line
You have no control over how the insurance company writes their policies and pays their claims. The only thing you can control is whether you purchase the policy or not. But ...
But, if you're employed by a company that requires you to carry malpractice and general liability insurance, your decision becomes more about whether you need that job or not.
But, if your landlord requires you carry professional and general liability insurance, your decision becomes more about where you want your office located.
But, if the people who refer customers to you require you to carry professional and general liability insurance, your decision becomes more about if you can replace that lost business or not.
But, if you work in places like hospitals, nursing homes, retirement communities, rest homes or other professional facilities, that require you to carry professional liability insurance, your decision becomes more about whether you need that income or not.
In other words, you may be forced to carry insurance that really offers you little or no protection. It becomes part of your overhead whether you want it or not.
Insurance used to be a good investment until the 1980s when it became a "necessary" expense. But sometime in the late 1900s and early 2000s, insurance became a bad investment for everybody except the shareholders and company executives.
Unfortunately, professional and general liability insurance still is a necessary expense for most healthcare providers -- an increasingly more expensive expense for something that covers less and less. That's the bottom line.
In the long run, it appears the best answer to this problem is to form your own private association.
