Glossary

Admitted Company
An insurance company licensed and authorized to do business in a particular state. MedMal Direct Insurance Company is an admitted carrier in the State of Florida.

Annual Aggregate Limit
The annual aggregate limit is the maximum amount the carrier will pay for all claims arising from incidents that occurred after the insured’s retroactive date and were reported during a given policy year.

Assessability
This is common in non-admitted carriers such as captives or risk retention groups. It is an obligation of policyholders to pay additional money in excess of premium amounts to cover past company losses for which reserves have proven to be inadequate. MedMal Direct Insurance Company is an admitted carrier, and its policyholders are thus not assessable.

Claim
Any expression of an intent to hold the insured responsible for damages arising from the rendering or failure to render professional services by you or by someone for whom you are legally responsible.

Claims-Made Policy
A type of policy in which coverage is limited to liability only for those claims that arise from incidents or events that happen after the insured’s retroactive date and are reported while the policy is in force.

Declaration
Also called “Declarations Page” or “Face Sheet,” this portion of the policy states such information as the name and address of the insured, the policy period, the amount of insurance coverage, premiums for the policy period and any coverage restrictions.

Loss Reserves
Amount of money set aside to pay for losses and loss expenses for reported claims as well as claims that have been incurred but not yet reported.

Occurrence Policy
A type of policy in which the insured is covered for any incident that occurs (or occurred) while the policy is (or was) in force, regardless of when the incident is reported or when it becomes a claim. Occurrence insurance for medical liability coverage is rarely offered today because of the difficulty in projecting long-term claims costs under this type of policy.

Policy
The contract between an insurance company and its insured. The policy defines what the company agrees to cover for what period of time and describes the obligations and responsibilities of the insured.

Policy Term
The length of time for which a policy is written.

Premium
The amount of money a policyholder pays for insurance protection.

Premium Credits
A credit included in the premium computation that recognizes a reduction in hazard, which makes the insured a better risk.

Premium-to-Surplus Ratio (P/S)
The ratio of net written premium to surplus. This ratio reflects a company’s financial strength and future solvency.

Prior Acts Coverage
Under a claims-made policy, coverage is provided for all claims that (a) occurred after the insured’s retroactive date and (b) are reported while the policy is still in force with MedMal Direct Insurance Company.

Risk Management
A systematic “scientific method” approach used to identify, evaluate, and reduce or eliminate the possibility of an unexpected outcome of medical treatment.

Surplus
The amount by which a company’s assets exceed its liabilities. A company’s surplus allows it to take on risk and serves as a cushion in the event that the losses from that risk exceed the premiums intended to cover the risk. Surplus serves to provide financial strength and to maintain fiscal integrity in the face of adverse loss experience that was not actuarially anticipated.

Tail Coverage (Extended Reporting Coverage)
Coverage that protects the physicians against all claims arising from professional services performed after the insured’s retroactive date but reported after termination of the policy. Some insurers offer this feature free of charge for retiring doctors who meet certain requirements.

Vicarious Liability
Liability for the acts of someone else for whom you are legally responsible.