Many optometrists shopping for insurance have a pretty clear idea of what they’re looking for— good coverage, positive reviews and affordable premiums may be a few of the items at the top of your list. But beyond the basics, it’s important to ask: What do you know about your insurance carrier itself?
Optometrists facing a malpractice claim, cybersecurity hack or damaging fire count on their carrier to be there when they need them. But not all carriers are the same. Like any business, a carrier could run into trouble, meaning they may lack the means to defend you against a claim or fund a settlement when you need it.
Before you buy your policy, ask yourself the following questions to ensure the carrier you’re working with won’t expose you and your practice to unacceptable risk:
Who Is Your Carrier?
Learning about your carrier is the first step, but with so many roles in the insurance industry, it can be confusing figuring out just who plays that role:
- Insurance carriers issue the actual insurance policy, charge the premium and pay for losses in the event of a covered claim.
- Insurance agents work directly for one or more insurance carriers selling products.
- Insurance brokers play a similar role, but work directly for customers, selling a carrier’s insurance products and services independently.
- Insurance administrators handle day-to-day operations, managing billing, claims filing and customer service.
Your carrier is the insurance provider that bears the financial risk of issuing you a policy, which is why it’s so important to make sure they’re dependable.
What’s the Carrier’s Rating?
Financial health is key when choosing a carrier. You can learn about a carrier’s finances by checking their A.M. Best Company rating, a global credit rating agency that is the “gold standard” in the insurance industry. A.M. Best’s letter-grade rating gives you an independent opinion of the carrier’s ability to meet ongoing policy and contract obligations, while its financial size categorization tells you the size of a carrier’s policyholder surplus.
What Trends or Changes Are Occurring?
Carriers can experience ups and downs, which is a good reason to investigate trending topics and recent developments of your carrier, especially when it’s time for renewal. If a carrier is in the news for poor service, unpaid claims, shrinking policyholder surplus or a ratings downgrade, it may not be wise to bind your coverage to that carrier. If in doubt, ask your insurance agent for more information about the carrier’s status.
What Are the Agent Policy Exclusions?
Most insurance agents carry their own errors and omissions insurance policy coverage to protect against potential claims. However, these policies can carry exclusions if an agent places coverage with an unstable carrier. Make sure to ask about exclusions.
Here are a few common exclusions that highlight why your carrier choice matters:
- No coverage for an insolvency loss if an agent placed business when the carrier was rated B or lower.
- No coverage for an insolvency loss if an agent placed business with a carrier who becomes rated B or lower.
- No coverage for an insolvency loss if an agent placed business when the carrier was rated B+ or lower and the financial size category of the insurance company is below VI ($25M).
What’s the Carrier History?
Find out how long the carrier has been in business and their expertise insuring business owners in your industry. A long-term focus helps ensure coverage for claims, while a short-term focus may lead a carrier to enact rate price hikes, face surplus shrinkage or slide into insolvency due to inadequate pricing. Remember that initial rates that are too good to be true may lead to these future problems.
Is There a Guaranty Fund?
Carriers that go into receivership after a claim is made may be able to provide some protection if there is a guaranty fund. But many lines of business, such as risk retention groups, do not have such protection. Even with a guaranty fund, maximum benefits are limited. If a carrier’s rating is in decline and there is no guaranty fund, it may be wise to choose another carrier.
What About AOA Insurance Alliance Carriers?
The AOA Insurance Alliance is administered by Lockton Affinity, known for having built an extensive network of reliable, financially stable carrier partners. In fact, Lockton Affinity requires insurance carriers they work with to have higher ratings.
Our attention to the carriers we work with helps ensure optometrists like you are covered with the best choice for insurance in your industry. It’s the only insurance endorsed by the AOA.
When you are choosing insurance to protect your optometry practice, remember that your choice of carrier is key. Monitor the carrier’s ratings and activities for signs of problems. Ask questions to learn more about your carrier and any exclusions or special requirements. Focus on reducing the risk to your business and career by choosing a great carrier.
