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FAQ's & Info

Q: What to look for in a Malpractice Insurance Carrier.

Evaluating the financial strength of any company should be done with the help of a professional or someone with appropriate financial experience.

Below are terminology and definitions used in the insurance industry and are offered as basic standard guidelines when evaluating insurance carriers.*

Net Written Premium – the premium amount shown in the company’s annual report Statement of Income after paying for reinsurance
Surplus – the sum of all items represented on the company’s Balance Sheet. This is typically termed “Policyholder Surplus” on the Balance Sheet. It represents the amount by which Assets exceed Liabilities and represents the Net Worth of the company.
Loss Reserves – money that is held in reserve to pay any present and/or future claims, including defense attorney fees, expert witness fees and in-house claims operations.
Premium to Surplus Ratio – Net Written Premium divided by Surplus. Industry standards suggest a ratio between 1:1 and 3:1.
Loss Reserves to Surplus Ratio – Loss Reserves divided by Surplus. This is an indication of the company’s ability to cover unanticipated reserve deficiencies. Industry standards suggest that less than a 4:1 ratio should be maintained.

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*The information found within this website is not deemed to be complete for every situation and is not a substitute for professional legal or insurance advice. It is an overview of some of the more common insurance terms and scenarios that may arise in certain instances regarding Medical Professional Liability insurance. The examples and models set forth in this website are for illustrative purposes only; to address specific concerns, please contact PLIG of SJ. Please be advised that you should always consult with the appropriate professionals to fully evaluate your individual situation as it pertains to insurance coverage. No reliance should be placed on the information contained on this website unless independently verified by PLIG of SJ. PLIG of SJ cannot, and does not, offer legal advice of any kind.

PLEASE NOTE: The Professional Liability Insurance Group of South Jersey is licensed in the state of New Jersey only and any and all content found within this website are intended solely for viewers who are licensed Health Care Providers in the state of New Jersey.

§Some links on this site will redirect your browser to independent, third-party sites with no affiliation to PLIG. Please be advised that any such links are provided solely for your convenience and information, and not as a representation of the quality or accuracy of the content of the third-party website, or an endorsement of the views contained therein.