One of the most overlooked aspects of a malpractice insurance policy is the claims-trigger, or what must occur for a particular insurance carrier to recognize an event as a “claim.” There are currently only two different types: written demand and incident demand. Written demand triggers mean that, for a carrier to recognize an event (a bad surgical outcome, a patient threat, etc.) as a claim, they have to receive either written notification of intent to file a claim or the actual notice of a claim from an involved party (a physician, a patient, or an attorney). In other words, they must receive it in writing that a claim will be or has already been filed.
Incident demand triggers, on the other hand, are much more flexible. Not only are written notifications considered claims (as in a written demand) but so are reported incidents that a physician might proactively report. For example, if a surgeon has an unfavorable outcome and the patient seems extremely upset, the physician can report this to his carrier, and if the claim trigger is incident, it would be considered a claim. Obviously, if the patient filed a written intent, this would be considered a claim as well, regardless of whether the physician reported the incident originally.
Some physicians might think, “As long as it gets reported, who cares whether I report it preemptively or the patient does it through a written notice?” There is one circumstance where it is extremely relevant what claim trigger a physician has—when they are on a written demand policy considering switching carriers. The reason is twofold. Although written demand policies do not “activate” until something is received in writing, the policy still dictates that a physician must report any incident that could result in a claim (any bad outcome). Doing so will not result in coverage unless written notification is later received, but the carrier still demands to know well before this if the physician thinks that a claim could result. The problem arises when a physician, adhering to the policy wording, reports an incident, yet he/she is on a written demand policy. The physician has now made it extremely risky to change carriers because his current carrier (written demand) will not cover the incident (nothing received in writing), but his new carrier, which could be written or incident, will not cover this reported incident either. If the new carrier is written demand as well, they won’t cover it for the same reason that the former carrier wouldn’t. If the new carrier has an incident demand trigger, it still wouldn’t be covered, as the incident was reported to the previous carrier. The new carrier would, therefore, offer coverage but exclude this incident/potential claim. If the physician moves to the new carrier and a claim does result from the incident (and written documentation follows), his old carrier will no longer cover it because the written notice was submitted after coverage was changed to the new carrier. The result of this messy situation is that the physician would likely not be covered by either carrier for this claim, despite following the policy protocol correctly.
While there are many circumstances where having an incident demand trigger is just a “nice” feature to have, the above example illustrates how having an incident trigger ultimately provides physicians with much greater flexibility should there be a bad outcome that is reported to the carrier. If a physician were to be on an incident demand trigger in the prior scenario, they could simply report the incident to their current carrier and then change carriers as they please, knowing that coverage has been triggered by their (now) prior carrier. The market has recognized the value in incident demand policies, as the majority of state-admitted insurance carriers now have incident demand triggers. It’s always a great idea to ask a broker what types of claim triggers are utilized by the carriers they are proposing. It might be possible for brokers to secure incident demand instead of written demand or more attractive pricing if the policy is written demand; at the very least, physicians will now be aware of what policy they have and its implications.