Insurance 101

Insurance is Complicated. Let us Take Some of the Mystery Out.

LAMMICO is proud to be your insurer. We have more than 40 years of experience in the industry and a high retention rate among our policyholders. In fact, we consider our policyholders to be more than the mutual owners of our company - they are our partners.

As our partners, you deserve the opportunity to learn how your medical professional liability insurance works and choose your coverage. We’re here to help you learn and help you make some of the most important decisions to protect your medical career.

Please contact your agent or the LAMMICO Business Development and Sales Department at 504.831.3756 or 800.452.2120 if you would like a premium quote or if you have questions about your current coverage.

How to Buy the Right Kind of Insurance

You provide high-quality healthcare. But adverse events can happen. As a physician or healthcare provider you need to make informed decisions to ensure that the appropriate insurance coverage will kick in when you need it most. Consider the following when shopping for medical malpractice insurance:

You can buy two types of medical professional liability insurance depending upon the state in which you practice: Occurrence or Claims-Made. Both types of policy offer mostly the same coverage. The difference is in how each policy responds to a loss. The following definitions explain this difference:

Under an “Occurrence” policy, coverage is provided for any incident that occurs during the term of the policy, regardless of when a claim arising from the incident is reported.
Under the “Claims-Made” policy, coverage is limited to claims arising from the performance of professional services subsequent to the retroactive date stated in the declarations and first made against the company while the policy is in force.

Because of the differences in these policies, they are priced differently, particularly in the first several years that a policy is in place.

Louisiana EXAMPLE

Dr. A and Dr. B have similar medical practices.
They both purchase professional liability policies with the same limits and coverage.
The only difference between Dr. A and Dr. B is that Dr. A buys an Occurrence policy and Dr. B buys a Claims-Made policy.
Neither physician had any premium rate increases for six years.

Please see the following sample chart* for each physician’s premium payments.

Premium in Effect	Dr. A’s Premiums (Occurrence)	Dr. B’s Premiums (Claims-Made)	Difference (Reporting Endorsement or “Tail”)
Year One	$1,000	$250	$750
Year Two	$1,000	$500	$500
Year Three	$1,000	$700	$300
Year Four	$1,000	$850	$150
Year Five	$1,000	$900 (Mature)	$100
Total	$5,000	$3,200	$1,800

* The numbers in this chart do not reflect a real policy and are merely a representation of the pricing structure.

If you employ an advanced practice healthcare provider (like an advanced practice registered nurse or a physician assistant), LAMMICO recommends that the same company insure everyone in your office.

In Louisiana, the advantages of having the same insurer are that you will know your staff’s limits of liability, that everyone is Louisiana Patient’s Compensation Fund (PCF) qualified, that premium payments are made on time, and that no conflicting provisions exist under policies from different companies.

If you are a LAMMICO policyholder and your midlevel provider is insured by a different company, you should get a Certificate of Insurance from that provider. LAMMICO strongly recommends that the certificate state that the provider’s insurance company has paid the PCF surcharge to qualify for protection under the cap.

If your practice or facility employs an advanced or allied healthcare provider who is not enrolled in the PCF, the PCF may not cover the practice or facility for any liability arising from a claim involving the employed provider and the practice. You should submit a copy of the provider’s Certificate of Insurance to a LAMMICO underwriter for review.

If you have additional questions, please contact your agent or the LAMMICO Business Development and Sales Department at 504.831.3756 or 800.452.2120

Your LAMMICO policy only provides coverage for “medical incidents occurring within the issue state.” It is important that you are adequately covered for any exposure you may have regarding telemedicine, especially if you are rendering care to patients outside of the state.

If you are practicing telemedicine, please contact the Underwriting Department at 504.831.3756 or 800.452.2120 so that we can assess your risk and determine whether we can offer an endorsement to your policy to cover out-of-state telemedicine exposure. Additional premiums may apply for out-of-state telemedicine coverage.

For access to Telehealth educational resources, click here.

In the face of cyber terrorism, medical record hacks and expensive proceedings that result from RAC audits, LAMMICO provides $10,000 limits of MEDEFENSE™ Plus/ Cyber Liability Insurance Coverage as part of all LAMMICO Claims-Made and Occurrence physician policies. LAMMICO-insured healthcare facilities receive an inclusive limit of $50,000 of this kind of coverage, and qualifying acute-care hospitals receive $100,000 limits in MEDEFENSE™ Plus/Cyber Liability Insurance Coverage.

LAMMICO also offers you the chance to buy higher limits of protection through Elatas Risk Partners.

LAMMICO wants to ensure that you have appropriate coverage. You can find out by checking on the declarations page of your policy.

It is possible for a plaintiff to file a claim against your corporation or professional legal entity, so you may need corporate coverage. In order for LAMMICO to defend your corporation against a malpractice claim, your corporation must be listed as an additional insured in your policy. In certain situations a premium charge may need to be assessed to assure that your corporate interests are appropriately protected.

If your corporation, clinic, group or partnership is not included on the Schedule of Insureds of your LAMMICO policy (or the policy of one of your co-owners or partners), please contact the LAMMICO Business Development and Sales Department to discuss your coverage options.

How Much Coverage Should You Buy?

How Much Coverage Should You Buy?

Knowing how much medical professional liability insurance to buy is complicated. You want to be sure that you get the most protection at the lowest possible cost. When you choose your level of coverage, you’ll need to consider:

The amount of risk your position involves
How much you can afford to pay
How much you are willing to pay

Because LAMMICO appreciates the cost associated with your medical professional liability coverage, we offer several discounts to help make your premium more affordable. We offer the following discounts to qualifying policyholders:

Risk Management Credit: You receive a 10 percent credit to the basic limits portion of your premium when you successfully earn a total of two Risk Management (RM) Credits annually. Risk management seminars are offered online. Webinars on certain topics are also held throughout the year.
New-to-Practice: If you are a newly graduated or soon-to-be graduated physician or dentist, you may be eligible for a 50 percent credit to your LAMMICO premium for your first 12 months of practice.
Part-Time: If you are practicing part-time, you may receive a percentage off both your LAMMICO premium and Louisiana Patient's Compensation Fund surcharge.
Deductibles: Insured healthcare providers, hospitals and facilities may receive a credit for retaining a portion of each claim.
Good Experience Credit: A 10 percent credit to the LAMMICO premium for policyholders who have been with LAMMICO at least five years and have excellent loss experience.

To learn if you and/or your facility qualify for these discounts, please contact your agent or the LAMMICO Business Development and Sales Department at 504.831.3756 or 800.452.2120.

In order for a corporation, partnership, limited liability practice, or limited liability corporation to be qualified under the Louisiana Patient’s Compensation Fund (PCF), all of the corporation’s shareholders, partners, members, agents, officers, or employees must be enrolled and qualified with the PCF. PCF qualification includes payment of applicable surcharges.

Without PCF qualification and coverage, a malpractice claim against your corporation could fall outside the Louisiana Medical Malpractice Act. That means such claims may not be capped under state law, and the PCF may not be responsible for indemnity payments on your corporation’s behalf.

Your corporation must file a new LPCF Corporation Application every year, upon renewal. The LPCF Corporation Application and instructions can be found on the Louisiana Division of Administration’s Website.

You must comply with any PCF inquiries to ensure proper coverage with both LAMMICO and the PCF -- even if the corporation has been dissolved. If you do not respond to the inquiry, the PCF may determine that your corporation was not enrolled. Also, LAMMICO may not be able to support coverage for a non-enrolled corporation.

LAMMICO is committed to ensuring that you have the necessary coverage to protect yourself and your corporation. If you have any questions, please contact the LAMMICO Business Development and Sales Department at 504.831.3756 or 800.452.2120.

For further information regarding requests from the PCF, contact the PCF at 225.342.8788 (fax: 225.342.8904 or visit https://www.doa.la.gov/Pages/pcf/Index.aspx).

How LAMMICO Determines Premiums

As a policyholder-owned company, we are committed to providing you with the lowest possible rates consistent with sound underwriting principles. So calculating your medical professional liability insurance premium involves many factors.

LAMMICO insures healthcare practitioners in most medical and dental specialties and subspecialties. For each specialty, LAMMICO’s actuary designates a premium rate classification. Liability risk factor statistics, such as claim frequency and severity trends – known as loss experience – determine a given specialty’s classification.

In LAMMICO's Claims-Made policy, premium rates build over the first five years. Rates are low for new policyholders, as they have no claim histories and substantially less risk of claims being filed during the first policy year. Upon renewal the second year, the premium increases because a policyholder is covered for claims arising in both policy years. The first-to-second-year step is the largest increase in base premium. Other increases are considerably lower than the first.

Annual step increases reflect the increasing risk over the next three years, during which time incidents may have occurred and could be reported as claims. Step increases continue until you reach a mature rate in the fifth year.

Your mature-rate premium remains stable, changing only when general rate adjustments are necessary. As with all types of insurance, medical professional liability rates reflect the amount of estimated risk based on your personal claim experience, as well as the claim experience of your specialty. The two main variables that determine these premiums are the frequency and cost of claims for each specialty.

To keep our rates as low as possible, we conduct an actuarial review every year. These annual reviews and rate adjustments help ensure that LAMMICO will be here for you in the long run.

LAMMICO offers two types of policy limit options:

Basic limits provide you with up to $100,000 per incident per year, and up to $300,000 aggregate for the year, for covered capped losses (and covered losses that are uncapped if you did not qualify under the Louisiana Medical Malpractice Act). Plus, LAMMICO provides you with $100,000 per incident per year, and up to $300,000 total for the year for covered uncapped claims (other than those where you are uncapped due to failing to qualify under the Louisiana Medical Malpractice Act).

Higher limits give you additional coverage in the event of an uncapped claim other than one that results from failing to qualify under the Louisiana Medical Malpractice Act).

Certificates of Insurance/Claim History

You'll want proof of insurance when practicing medicine:

Certificate of Insurance
Log in to Members-Only to print, view, download, save, email and/or fax a copy of your certificate of insurance. If you have not registered at lammico.com, sign up today to get access to your certificate of insurance, online CME and much more.

Credentialing
For questions regarding credentialing, contact our Underwriting Department at 504.831.3756 or 800.452.2120.

Claim History
For the privacy and security of our policyholders, we do not provide digital access to claim records on lammico.com. To receive a copy of your claim history, contact our Underwriting Department at 504.831.3756 or 800.452.2120.

If an insured “steps down” from his or her current classification to one that has a lower risk rating (for example, moving from a surgical to nonsurgical practice) then LAMMICO charges a one-time “step down” fee. This one-time charge covers the exposure to potential claims from the prior, higher-rated classification. All future premiums are calculated based on the lower-rated risk classification. The policyholder’s retroactive date remains unchanged.

To make a change to your existing policy, contact your agent or the LAMMICO Underwriting Department at 800.452.2120.

The LAMMICO policy includes a waiver of the reporting endorsement premium if the policyholder dies, becomes permanently disabled, or if the policyholder permanently retires from the practice of medicine while the Claims-Made policy is in force. With respect to a retiring practitioner, certain age and number of years insured requirements apply.

For more information, please contact the LAMMICO Business Development and Sales Department at 504.831.3756 or 800.452.2120.

Insurance Glossary

When you buy an Occurrence policy, the cost of all malpractice actions against you resulting from incidents during a policy year is paid in full. You will not need to pay an additional premium if you cancel your policy. The premium you pay for a policy year will cover all future claims that occurred during that policy year.

For example:

A medical practitioner buys a LAMMICO Occurrence policy for Year 5 but does not renew for Year 6. In Year 7, the practitioner reports a claim for a surgery he performed in Year 5. The company will defend him because the incident occurred when his policy was still in effect.
If the same medical practitioner had performed the surgery in Year 6, LAMMICO would not provide coverage for the practitioner because the incident would have occurred after the policy period of Year Five, when the practitioner was insured.

Occurrence policies cover an insured against claims that arise from an event that took place during the policy period regardless of when the claim is reported. The incident/accident date triggers coverage for a policy in force. Even if a claim is made years after the event/incident allegedly took place and the practitioner has ended his or her insurance coverage, a healthcare professional will be covered if the policy was in effect when the alleged event/incident occurred.

When you buy a Claims-Made policy, the cost of a claim made during the policy’s active term is covered (pursuant to policy provisions) as long as the incident took place on or after the applicable retroactive date. The retroactive date is the date after which an incident must occur for coverage under your policy to apply. You can find the retroactive date that applies to your policy on the Declarations page and any applicable endorsements.

For example:

A medical practitioner buys a LAMMICO Claims-Made policy for Year 2 but does not renew for Year 3. In Year 4, the practitioner reports a claim for a surgery he performed in Year 2. LAMMICO would not defend or indemnify the practitioner unless he or she previously purchased a Reporting Endorsement (Tail).

When you buy Claims-Made coverage, your initial premium will be lower than premiums for similar Occurrence policies. The Claims-Made premium is based on the possibility that a claim will happen during the year of the premium charge. Claims resulting from professional services are not usually reported during the same year; therefore, the first year’s Claims-Made premium is significantly lower than subsequent premiums.

This stair-stepping of premium continues for five years until you reach a mature premium. Once you do, assuming there are no rate increases, you pay the same premium every year thereafter, with one significant exception -- if you cancel your policy you need a reporting endorsement or “tail.”

Claims-Made policies cover an insured against claims reported during the policy period. The report date triggers coverage for a policy in force. When the policy has expired and a claim arises, the insurance company is not obligated to provide coverage for claims made after the expiration date, unless a reporting endorsement has been purchased by the insured. Claims that occur before the retroactive date are also not covered.

Claims-Made policies, require the purchase of extended reporting endorsements (commonly known as "Tail"s) if you discontinue your coverage. The policy covers only claims made during the active period. If you report a claim after the termination date of your Claims-Made policy, a reporting endorsement or Tail covers losses reported after the cancellation date of your policy.

A single aggregate will be applied to the tail coverage, meaning that the policy will afford one maximum amount of insurance to cover all claims reported after the policy is canceled.

According to the Louisiana Patient's Compensation Fund’s (PCF) website, the purpose of the PCF Oversight Board is to guarantee that affordable, medical malpractice coverage is available to all private healthcare providers and to provide a certain, stable source of compensation for legitimate victims of medical malpractice.

For more information regarding the PCF, please visit their website.

In Louisiana, a third-party claim involves someone who is not your patient. Some examples of third-party claims:

One of your patients causes a car accident while under the influence of a prescription drug that you prescribed, and someone else, who is not your patient, is seriously injured. The injured person decides to file a claim against you.
You are a psychiatrist who treated a patient who in turn harmed a third party, and that party pursues a claim against you, alleging negligence in your care of the patient.
Someone contracts an infection like methicillin-resistant staphylococcus aureus (MRSA) from your patient. That person might claim that you failed to warn your patient that he was contagious.

If your insurer does not cover these types of claims, you personally may be responsible for damages. This is especially important in Louisiana, where the Supreme Court has taken the position that the Louisiana Patient's Compensation Fund covers injury to patients only, not to third parties.