Legal Malpractice

Coverage Overview

Medical Malpractice Insurance affords crucial liability insurance protection for Physicians, Surgeons, Dentists and other medical professionals and facilities for their alleged wrongful acts committed in the course of their professional work..

Brief History

In 1976, an unprecedented event occurred changing the medical malpractice insurance industry forever. Most of the insurers providing medical malpractice coverage at that time made a decision to exit the medical malpractice insurance market due to an influx of multi-million dollar settlements. This type of action was unheard of at for it’s time, creating havoc for the many physicians, providers and hospitals affected. With nowhere to turn, they were faced with the additional burden of self insuring, also, not very common for it’s time.

Needless to say this spread fear, panic and resentment among providers and the medical community in general. As a result, many physician groups and organizations were formed, most notably the Physician Insurers Associates of America (PIAA), for the purpose of creating 50 self insured medical malpractice insurance programs across the country. Through these programs, the doctors mutually agreed to capitalize these programs with surplus loans and notes, which would enable them to collectively insure the medical malpractice insurance losses of it’s members. These programs became knows as the “Bedpan Mutuals” and consisted of what was known as the Medical Inter-Exchange of California, of New York, of New Jersey, etc. These companies operated individually for almost 10 year with virtually no outside competition from other insurers still in the market. Often referred to as Reciprocal Exchanges, they were generally controlled by a particular medical society in a given state and overseen by a a management group referred to as an “Attorney in Fact”

However, things started to change in the mid 1980’s, when many of these Reciprocal Exchange programs started to experience poor return on investments, and slumping surplus requirements. As a result, they could not adequately keep these programs capitalized. Many programs either went bankrupt or disbanded. Some merged or were sold Thus, the majority of these programs began to disappear. At the same time, the insurance industry was also experiencing the “hard market “which made it even that more difficult to find medical malpractice insurance coverage at that time.

By the late 1980’s many insurers saw an opportunity to get back into medical


malpractice insurance business and before too long many were offering coverage again on a nationwide basis.

Nonetheless, by the early 2000’s history began to repeat itself, and the medical malpractice insurance community had experienced “déjà vu” with the exodus of many of the major medical malpractice insurers withdrawal from the marketplace, once again.




Currently, medical malpractice insurance is increasingly becoming one of the most difficult areas of insurance to underwrite and insure today. Precedent setting settlements along with astronomical defense costs have driven many carriers from the marketplace entirely, while those few remaining are faced with the daunting task of pricing medical malpractice insurance adequately and profitably so they will not join the ranks of their fallen contemporaries in other states. Many have also blamed the poor performance of the stock market which is affecting the insurance companies’ investment income and insurers are feeling the financial effects of September 11, as well.

Whatever the reasons, the medical community is once again feeling the pinch of skyrocketing costs.

The following charts will help illustrate the dramatic increase in jury awards and settlements for the period of 1993 through the year 1999.




Based on this statistical data, it is apparent that AWARDS and SETTLEMENTS have escalated at an alarming rate with no end in site if this trend continues.

Medical errors kill between 48,000 and 150,000 persons each year, according to the Institute of Medicine. Some of the more common allegations of wrongful acts against the medical community include;

  • Failure to properly diagnose
  • Surgical mishaps
  • Negligence
  • Administering the wrong drug
  • Administering the right drug in wrong dosage
  • Bad handwriting causing medical errors

Psychiatrists are unique in the sense that they often face other allegations of wrongdoing such as sexual abuse and molestation.

Medical Professionals are held to high degree of skill, care and diligence when providing their services. When they fail to demonstrate these attributes, this could spell trouble for the unfortunate physician. What’s more, for the physician with a history of claims and/or other disciplinary actions against them, the marketplace is even less forgiving, since they cannot qualify for the very few individual or captive insurance programs available today.

But ExecutivePerils can help. For over 2 years, we have been helping retail broker and agents nationwide with their most difficult placements. ExecutivePerils has the experience, knowledge and underwriting creativity to help place your most difficult risks and get the job done. We have carriers willing to underwrite even the most challenging risks, when others wont.

Coverage highlights include:

  • Coverage for Individual Physicians, Surgeons & Dentists
  • Claims-Made
  • Entity Coverage
  • Coverage for miscellaneous medical professionals, physician’s assistants, nurses, etc.
  • Increased Aggregate Limits
  • Defense outside the limit (available for some risks).
  • Low deductibles with credit for increased deductibles
  • Prior Acts Coverage (available for some risks)
  • Admitted and Non-Admitted Insurers