Policyholder Services

The Impact of a Claim on Your Policy

By Kimberly Wittchow, JD, OMIC Staff Attorney

Digest, Winter 2006

Stress and worries abound when a patient sues or claims malpractice. One concern of insureds is the effect such action will have on their insurance coverage. Although claims can and sometimes do have an impact on insurability, understanding how a claim is handled at OMIC may provide insureds with some peace of mind.

Each department at OMIC has a different responsibility when a claim arises. Risk Management encourages insureds to be proactive and contact the department when medical incidents or issues occur so the risk manager can help them appropriately respond to the incident and incorporate any necessary changes in their practices or procedures. The Claims Department, in cooperation with the insured, wants to resolve the claim or lawsuit as efficiently and cost effectively as possible. Underwriting, meanwhile, must make certain that OMIC insures good risks. Insureds may therefore get several seemingly conflicting messages from the company depending on the status of their claim. Rest assured, however, that there are checks and balances in OMIC’s operational protocols to balance these priorities. Most importantly, OMIC’s Board of Directors is made up of ophthalmologists who not only approve company processes but also conduct claims and underwriting reviews.

Physician Review Panel

OMIC employs a continuous underwriting process, monitoring the claims activity of all insureds not only in anticipation of policy renewal, but also during the course of the insured’s coverage. Whether an insured’s claim(s) will warrant further review by OMIC’s physician review panel depends upon the insured’s history of claims frequency the number of claims or suits) and severity (indemnity amounts) and on the specific circumstances surrounding the claim(s). This could include indications that an insured is performing experimental procedures outside of the ordinary and customary practice of ophthalmology or has provided substandard care, followed poor informed consent techniques, or failed to cooperate during the claims-handling process. OMIC’s reviewers consider the insured’s entire claims experience, including his or her experience with insurance carriers other than OMIC.

After consideration, the physician review panel may determine one of several outcomes, including any of the following:

• The panel may continue the insured’s coverage without any conditions placed on his or her policy.

• The panel might continue the policy coverage with conditions, such as endorsing the policy to exclude coverage for certain activities or reducing the policy limits.

• The panel could also conclude that the insured’s risk profile falls outside of OMIC’s conservative underwriting standards, and that OMIC, therefore, is no longer in a position to cover the insured beyond the expiration of the insured’s policy.

• Finally, the panel, in rare circumstances, might determine that the insured’s actions warrant mid-term cancellation if the reasons for the cancellation fall within the policy provisions. These include fraud relating to a claim made under the policy and a substantial increase in “hazard insured against,” such as claims frequency or severity or unacceptable practice patterns.

Insureds are provided the opportunity to appeal coverage and termination decisions to the full Underwriting Committee. OMIC would not generally apply a policy surcharge (higher premium) because of claims experience.

Reporting a Claim or Medical Incident

The policy requires that an insured report to the Claims Department any claim or medical incident that occurs during the policy period which may reasonably be expected to result in a claim. The reporting of such an incident triggers coverage with OMIC. Even if the insured doesn’t obtain an extended reporting period endorsement (tail coverage) when he or she leaves OMIC, OMIC will continue to insure him or her for all covered claims and incidents reported while the policy was in force. An incident that does not develop into a claim will have no effect on the insured’s premium and will not be included in claims history reports provided to hospitals or other third parties. Claims or incidents reported to OMIC’s Risk Management Department are kept confidential: they are not shared with the Underwriting or Claims Departments without an insured’s permission and are not considered reported to OMIC for coverage purposes.

Finally, any indemnity payment made by OMIC on behalf of an insured will result in the removal of the insured’s loss-free credit upon renewal and for two policy terms. Then, if no further claims payments are made on behalf of the insured, the insured will begin earning loss free credits again, beginning at 1% and increasing 1% annually to a maximum discount of 5%.

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