One type of malpractice insurance coverage (i.e. claims made vs. occurrence) is not ‘better’ than the other. Occurrence coverage costs more than claims made, but after paying the tail on a claims-made policy, the two are relatively close in cost. Most professional liability coverage is now provided on a claims made basis, although tails may be "built in." Generally, in claims made coverage, there is a yearly increase in premiums through the fourth, fifth or sixth year, at which time the policy is mature. The increase reflects the insurance carrier's increased risk. For example, more claims are likely to be filed in the fourth year than in the first. The fourth year's policy is insuring events occurring in years one through four; the first year's policy is only insuring events occurring the first year. The exposure levels out because potential plaintiffs have a limited time in which to file malpractice suits.

The cost of a tail is often based on some multiple of the mature claims-made premium, and it is often around 2.0 to 2.5 times the annual mature rate. The occurrence policy does not increase yearly to a mature rate. Its rate is set when the policy is purchased, although it may vary if market conditions change.

Malpractice Reductions with practice guidelines

The American Society of Anesthesiologists (ASA) in 1986 promulgated guidelines for intraoperative monitoring. Physicians agreeing to incorporate these guidelines into practice benefited from a reduction in their medical malpractice liability insurance premiums of up to 34%. It is noteworthy that the ASA guidelines focused on quality of care rather than reduction of its costs. One consequence was, in fact, initial increased expenditures mandated by purchase and maintenance of requisite monitoring equipment.10 The authors are unaware of any similar national guideline based programs for emergency physicians.

Malpractice Reductions related to Risk Management Activities

Some insurance companies provide malpractice insurance premium discounts for emergency physicians or emergency physician groups that participate in dedicated risk management and related programs. For example, the Norcal Mutual Insurance Company, a California insurer, provides incentives to physicians who participate in on-site assessments, educational programs, and quality-based care rounds. Physicians find this to be effective in reducing their premiums in the arena of five percent for an individual policyholder and upwards for large groups with ten or more physicians.

The Copic Insurance Company of Colorado utilizes a rating system to gage physicians’ practice exposure. Participation in an adverse drug reaction risk management program can result in premium savings for individual physicians in upwards of ten percent. It was believed by this physician insurer that the control of medication errors was a significant risk reduction opportunity for individual physicians and, therefore, the insurance company. According to the company, adverse drug reactions are caused by inappropriate dosages, administrative routes, etc. and have been found to be responsible for up to 28 percent of all hospitalizations and 200,000 fatalities a year. A Reuter insurance briefing states that “.. the program rewards Copic-insured physicians who adhere to risk management guidelines and continue to expand their risk management knowledge.”

Increased Malpractice Costs related to specialty programs.

Some insurance companies target physician clients with a poor malpractice experience. Physicians with a poor malpractice experience may have difficulty obtaining malpractice insurance in the marketplace. Certain companies exist that work with these physician clients for a higher premium. For example, the Frontier Insurance Company created the Frontier’s Alternative Risk Physicians program. The program is designed to help “nonstandard accounts” reduce their liability risks and return to the standard market within three to five years. Frontier makes risk management education mandatory for “nonstandard doctors”.