Medical professional liability industry update

The year 2013 was once again a year of financial growth for the medical professional liability (MPL) insurance industry, despite a continued decline in profitability. While the industry’s operating ratio remains well below 100%, it has increased noticeably relative to 2011, driven by a decline in reserve releases, increased expenses, and diminished investment income.

Despite this decline in profitability, the MPL industry again returned a substantial portion of its income as dividends to policyholders. Surplus also grew moderately in 2013, providing the MPL industry with additional capital support. MPL writers continue to confront the risk associated with a possible increase in inflation and continue to face uncertainties stemming from healthcare reform.

To get a more detailed picture of the state of the MPL industry today, Milliman’s Chad Karls and Susan Forray have analyzed the financial results of a composite of 38 of the largest specialty writers of MPL coverage using statutory data. The consultants have compiled various financial metrics for the industry in this article.

Reprinted from the Second Quarter 2014 issue of Inside Medical Liability, Physician Insurers Association of America. Copyright, 2014.