The health care insurance industry, or really any insurance industry for that matter, is full of jargon and seemingly cryptic language that only veterans of the language can understand. So let’s get to the point. If I am a health care provider, chances are that whatever state I practice in, I’m going to need insurance.
One of the most important things I’ll want to know as a health care provider is how I can protect myself best, at the lowest price. One of the best ways to save money is to understand how insurance is categorized and in which category you have the most leverage for saving money in.
Two of the largest categories are: insurance written by an admitted carrier, and insurance written by a non-admitted carrier.
What is an Admitted Carrier?
An admitted carrier follows the guidelines outlined by the Department of Insurance (DOI) in the state in which they are writing business. Many times this is multiple states, and sometimes all states. These carriers are required to file their rates with the DOI, which then approves their use. The carriers must use these filed rates on all clients and cannot deviate.
This essentially means that whether you are a podiatrist or a cardiologist, you’ll receive the same insurance rate.
What is a Non-Admitted Carrier?
Often times, admitted carriers often do not meet all the needs of many insurance buyers. Non-admitted insurance carriers (sometimes referred to as surplus lines carriers) offer an opportunity for coverage for doctors that might otherwise be uninsurable. Policies such as Errors & Omissions (E&O), Directors & Officers (D&O), and Employment Practices Liability Insurance (EPLI) are among those that are often not written by admitted carriers.
Without the non-admitted carriers, high-risk specialties, or doctors with claims would be uninsurable. However, because the non-admitted carriers do not have to file their rates with the DOI, they retain the flexibility to price doctors according to their specific exposures. While these companies are not licensed by the DOI, they do have to go through an approval process that includes providing evidence of minimum capital and surplus requirements. When these requirements have been met to the DOI’s satisfaction, the DOI may approve a company to conduct business in that state.
Financial Ratings
Regardless of whether a carrier is admitted or non-admitted, one of the best gauges for determining the security of one’s policy is to check the financial rating of the company. The independent industry standard for rating insurance companies is AM Best Company. AM Best rates a carrier on financial strength and size based on policyholder reserves.
The Madison Advantage
When you look at your quote from Madison, you will see the AM Best rating and also an indication if your carrier is admitted, or non-admitted. We will always verify that all non-admitted insurance companies we offer are approved by the DOI. If you have special concerns about a particular carrier, please contact Madison Healthcare at 800-603-3311. We are more than happy to answer any and all of your health care insurance questions.
