Each year since 2016, physicians have experienced a hardening medical professional liability market resulting in significant premium rate increases, diminishing insurer competition, and social inflation, among other concerning factors. The successful tort reforms passed in the early 200s have virtually all been overturned, leading to increased claim frequency and severity. As we head into 2022 full steam ahead, physicians should bear in mind these five trends as they navigate medical professional liability renewals.
1. Continuing Rate Pressure – The extreme rate pushes between 40% and 100% are waning; however, insurers are still pushing for rates and states have signed off on increases ranging from 6% to 16% depending on venue and specialty. New malpractice-focused markets are entering the fray, which should lead to more competition.
2. Stable & Concerning Claim Activity – Although the 2020-2021 claim frequency data until this point is relatively stable, it’s quite possible physicians will see increasing frequency in 2022 with severity continuing to surge. Dormant litigation stalled due to COVID is now moving forward, and the plaintiff bar is ravenous.
3. Telemedicine Coverage – Telehealth boomed during COVID, and the widespread use is here to stay. Malpractice coverage issues can arise if the provider is not properly licensed in the state where the patient resides. Additionally, there is also a considerable overlap of risk with cyber liability.
4. Non-Existent Tort Reform – There are no major tort reforms getting through the state or federal legislatures. Most notably, the 39 states lacking noneconomic damage caps have not been able to prove sufficient constitutionality.
5. Insurer Profitability – Combined ratios over the last decade were inching upwards until 2016 when they surpassed 100%. Insurers’ medical professional liability books continue to suffer due to underwriting losses, depressed investment income, and increasing defense expenses.
TIPS FOR NAVIGATING THE MARKET
- Depending on size and complexity, start the renewal planning process between 4-6 months out.
- Craft a carrier RFP highlighting your positive risk characteristics and gaining preferential treatment.
- Utilize analytics to project renewal pricing and improve negotiation leverage.
- Consider using video conferencing to meet with competing underwriters and personalize the process.
- Demand a detailed coverage analysis to avoid punitive exclusions being added to your program at renewal.
- Request a detailed service plan after binding the renewal to ensure a return on broker compensation.
- Work with a broker who understands the nuances of an evolving healthcare landscape and has strong relationships within the medical professional liability community.