What does the future hold for medical professional liability insurance? In an interview with the Professional Liability Underwriting Society (PLUS), Milliman principal Chad Karls discusses new factors affecting the industry and past trends that provide an indication of where the industry is headed.
In a recent article, Chad Karls, editor of the Medical Liability Monitor’s 22nd Annual Rate Survey, explores when the medical professional liability (MPL) market will break out of its current state and examines other factors influencing the MPL insurance market. He describes how that market arrived at its current position and the contradictory state of the market today; he also offers new ideas about how long it will be before the market begins to harden and why that will be necessary before change can occur.
This article was published in Medical Liability Monitor.
While the medical professional liability (MPL) industry has enjoyed what is arguably its greatest financial success ever during the last several years, one cost element has increased at a noticeably higher rate than the others: the average defense cost per claim.
Gleaning insights into defense costs data can lead to a better understanding—and better management—of such costs.
The proliferation of web-based business transactions, paired with advances in data mining and data warehousing techniques, makes it possible to extract more detailed and valuable insights from existing defense cost data than ever before.
Armed with this information, companies will be able to better manage the entire claims process, including the cost of defense.
This article from the Physician Insurer explores these issues in depth.
Last year was another year of financial growth for the medical professional liability (MPL) insurance industry. The industry’s combined ratio and operating ratio in 2011 increased slightly from 2010, though both ratios remained near the low levels seen since 2006. Insurers were able to release reserves once again, and they returned a substantial portion of these releases as policyholder dividends. The MPL industry once again set a record for the amount of dividends returned to policyholders during 2011 despite the slight decline in financial results. Surplus also grew moderately in 2011, providing the MPL industry with additional capital support.
We’ve blogged often about accountable care organizations (ACOs) and about medical professional liability (MPL). But how do the two tie together? Recent coverage by Best’s Insurance News digs into the connection between the two:
ACOs may be a new market for physician insurers, but the risk insured will be a familiar one.
“How do we approach this market as an opportunity?” asked Chad Karls, principal and consulting actuary for Milliman, Inc., during the session.
The first thing to know is the medical professional liability risks that an ACO will have. “Don’t lose sight of that,” he said. “That is the elephant in the room when it comes to ACO insurance coverage needs. That medical professional liability is the single largest risk.”
In response to the medical professional liability (MPL) coverage crisis in the early years of the last decade, many new insurance programs specializing in MPL were created. Now that these companies have matured and posted several years of their own experience on their books, it is a good time to examine how they are performing relative to their long-established peers.
While they have generally thrived, these new companies are facing emerging challenges, including continuing soft-market conditions, a declining independent-physician exposure base, lower anticipated investment returns, and higher underwriting-expense ratios.
See the article here.
The medical professional liability (MPL) insurance market appears to be slowly and steadily getting softer, and it will likely be a few years before the market hardens—the underlying facts don’t support a quick turnaround on rates.
Insurance companies might want to begin thinking outside the box to protect and expand market share and profits. Fortunately, the industry is well-positioned in terms of expertise and finances as it rouses itself to address these challenges.
For more, check out this new article from the Medical Liability Monitor.
Medical professional liability (MPL) claim frequency has been on the decline since 2001. With the economic slowdown impacting a number of different industries, MPL carriers are asking: Is there a direct relationship between the state of the economy and future trends in MPL? How could high unemployment affect the already low MPL claim frequency?
In this Best’s Review article, Chad Karls and Susan Forray use a statistical analysis based on the U.S. unemployment rate to forecast future trends in MPL claim frequency.
Former White House budget chief Peter Orszag has an editorial on medical malpractice in today’s New York Times. Here is an excerpt:
The academic literature tends to play down the role of medical liability laws in driving up health care costs. Doctors themselves, however, almost universally state that malpractice statutes lead to extraneous testing and treatment.
It is also conceivable that because such laws usually focus on “customary practice” — that is, a doctor who has treated a patient the way most other doctors in the area would is considered safe from accusations of malpractice — they create a strong contagion effect among doctors. The laws, no matter how weak or stringent, may therefore explain why doctors in some parts of the country generally adopt much more intensive approaches than those in other areas do.
The traditional way to reform medical malpractice law has been to impose caps on liability — for example, by limiting punitive damages to something like $500,000. A far better strategy would be to provide safe harbor for doctors who follow evidence-based guidelines. Anyone who could demonstrate that he has followed the recommended course for treating a specific illness or condition could not be held liable.
The idea of safe harbors for doctors that use evidence-based medicine is one of several outlined in this paper from last summer: “Retooling Medical Professional Liability,” by Chad Karls. For more on evidence-based medicine as a source of efficiency and quality improvement, see this paper.
This is from Best’s Week:
In a recent A.M. Best webinar broadcast on May 12, Chad C. Karls, a principal and consulting actuary from Milliman, described the pressures that some start-up medical professional liability writers have faced.
Karls said there were 154 start-up medical professional liability companies that formed between 2002 and 2008. That group pertains to companies with 95% of their premium in medical professional liability and includes risk retention groups.
“We’ve seen 15 of those now go away in some shape or form,” Karls said during the webinar. “Fortunately, most due to acquisitions or voluntarily saying I’m done with my self-insurance program, the market is softening now and I’m going to set aside this captive or this risk retention group, whatever it is that I set up and 15 of those have gone away. So, that’s not an insolvency, but that has been one of the reasons why some of these companies are no longer in existence of the start ups that we identified.”