Monday, August 21, 2006

Insurance companies and doing business in New York

Although I have a lot to say about health insurance and occupational therapy I will save it for another day. That is a topic that deserves several entries.

Instead, since people email me and tell me that they may be interested in starting their own private practices I thought that this 'other insurance' information would be interesting for people to read about.

In the last month I have had interesting interactions with my professional liability insurance provider, my general liability insurance provider, and now the NY State Department of Labor who administers the FUTA tax, also known as ‘unemployment insurance.’

I dutifully pay our professional liability (malpractice, etc.) each year and have never had a claim thank goodness. It is common for large contracts to require listing on the policy as an ‘additional insured.’ This is fine, but the underwriting department of the professional liability insurance company has strict rules about the technical wording of who is listed as the ‘additional insured.’ It took about five phone calls to haggle between the contract’s attorney and the insurance company before there was agreement on how the additional insured should be listed. It was quite a process.

For general liability, I received a letter from my insurer (who covers ‘slip and fall’ issues, fire, theft, etc.). Based on an alleged review of my website they have determined that I am at too high of a risk for them to insure. I never even knew that they reviewed websites and looked for reasons to terminate policies! They never asked me a single question, our business activities have not materially changed, we have never had a claim, and they have been our general liability insurer for this entire time. The best I can figure is that they think I am overdue for something? Do they actually apply statistics and probability theory to their decision making? This is quite disruptive because in addition to getting a new insurer I have to get additional insured written in for some purposes on this policy as well. Ugh.

Lastly, New York State’s unemployment system is in the red and it hasn’t paid back its loans from the federal government. So what happens when you don’t pay back your loans? Well if it is you personally you get whacked with a poor credit rating and you have to pay higher rates and higher fees. The same is true for New York State, except they happily pass the increased costs on to the employers. FUTA is something that every employer has to pay for the benefit of employees and the costs can’t be directly passed on. That means profits are lower, and employers are less able to hire. That means some people get laid off and have to USE unemployment insurance. Then the more that it is used the higher the state ratchets up the rate – it can go as high as 9.9%. Thanks for staying on top of your payments, New York.

Anyway, if you are going into private practice, these are some of the non-health insurance issues you will face. It is complicated, time consuming, costly, and you will have to learn things that you never imagined you would have to learn.

It is still worth it, in my opinion. I just like to rant about it once and a while.

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