Medical malpractice is a negligence by a medical professional that causes injury or death to a patient. A lawsuit involving malpractice can be quite costly, thus inviting the need for health care providers to protect themselves from liability. In recent years there has been a great deal of discussion regarding the rising cost of medical malpractice insurance rates and the effect it has on the healthcare economy.
How Does Medical Malpractice Insurance Work?
We encounter some competitors who give our business a bad rep. In general, most insurance brokers work very hard and do the right thing, but some do not. Most brokers earn a 10% (sometimes 15%) commission on the placement of your coverage. That commission is gross revenue for the brokerage. The brokerage then pays its overhead (rent, highly paid employees, and its broker malpractice premiums et al) and that leaves profit, which is not huge.
So if you pay $45,000 for your malpractice insurance coverage, the broker is paid $4500 by the insurance company. I write ‘paid by the insurer,’ since this commission is built into the rates. If you went directly to an insurer to buy your coverage, the insurer would not lower your premium for the broker commission; it would keep the money even if you have no broker.