Does financial strength matter?
Financial strength of an insurance company is a significant factor in selecting your malpractice insurance company, especially in difficult economic times. It is essential to have a long-term relationship with your malpractice insurer. If you were to see a patient today, it could take nearly five years for any resulting claim to be resolved. And a few lawsuits can linger for up to a decade! This is just one reason why you want reassurance that your malpractice insurer will be in business, not just for the term of your policy, but also for many years in the future.
Unfortunately, many malpractice insurers have failed financially or completely left the market leaving their insureds without coverage and/or funds to pay future claims. If you have to replace your policy from one of these insurers, you may find it very difficult to find future coverage from a quality company. Claims reported to these insurers may not be fully covered as a new company may be concerned about the dentist reporting existing lawsuits that should have been given to the previous company.
How do I determine the financial strength of an insurance company?
Consumers purchasing insurance products may look to independent rating agencies to help determine an insurance company’s financial stability. The two most commonly referred-to agencies are Standard & Poor’s and A.M. Best.
While these ratings in themselves are a good, unbiased source of a company’s financial stability, the biggest difficulty for a new dentist is understanding the differences between each rating level. Some companies have high ratings, some have low ratings and some have none at all. History has shown that financial strength does matter, especially in difficult economic times. Today’s insurance policy could be required to defend claims for many years in the future, and you will have to reach your own conclusions as to the importance of a financial rating.
