Tag Archives: Chad Karls

Medical professional liability industry’s profitability declines while maintaining overall favorable results

Surplus grew slightly in 2015, leaving the medical professional liability (MPL) industry in a financial position roughly consistent with where it has been since the end of 2011. The increased capitalization and favorable operating ratios in the MPL industry of late have had one primary cause, the release of prior-year reserves. In 2015 in particular, reserve releases contributed 24 points to the industry’s operating reserves. The reserve releases are similar to those during 2014 and represent a decline relative to each of the years 2008 through 2013. Milliman consultants Chad Karls and Susan Forray provide more perspective in their recent Inside Medical Liability article.

How can big data reduce MPL litigation costs?

Defense costs are the greatest expenditure for many medical professional liability (MPL) insurers. Employing big data analytics may help MPL insurers control their litigation expenses more effectively. Milliman consultant Chad Karls provides perspective in his article “Big data analytics: A practical application for MPL insurers.”

Here is an excerpt:

The new and rapidly advancing science of big data analytics offers MPL insurers the opportunity to absorb the massive amount of legal invoice data as it is being reported, take a deep dive into it, and – with the help of sophisticated algorithms – quickly derive valuable insights that can be used to better understand and manage the claims process.

The result is precise, actionable information that insurers can utilize to evaluate and manage their defense strategies – even as cases are progressing from discovery to depositions, from the expert witness prep phase to trial and beyond….

So, once this data has been properly prepared and constructed, an MPL insurer is in a position to investigate the efficacy of its claims-handing strategies. Rather than relying on just intuition and judgment, which are often biased by one’s outlier and/or most recent experiences, we can allow the data to inform our strategies. We can answer questions like these:

• Is it an effective strategy to file a motion for summary judgment (MSJ) in a particular venue or with a particular judge, given our historical success rate? How much does it cost to file an MSJ?
• What is the average cost of an expert deposition and are we taking more of them now, or has the average cost per deposition increased, or both?
• What is the optimal lag between preparing our defendant for his or her deposition and the deposition itself, if any?
• Do we tend to get a better outcome when the lead attorney’s hours represent at least X% of the total hours spent on the case?
• How much does it cost to have our defense firms comply with our 90-day claim summary report, and does the compliance rate correlate with the outcome of the claim?
• Can we develop a more cost-effective strategy for our record retrieval and court reporting costs?

Medical professional liability profitability continues to decline from peak levels

In 2014, surplus grew slightly, leaving the medical professional liability (MPL) industry in a financial position roughly consistent with where it’s been since the end of 2011. The release of prior-year reserves has spurred the increased capitalization and favorable operating ratios in the MPL industry of late. Additionally, the industry’s pattern of declining frequency has ended, and indemnity severity trends have remained manageable. MPL insurers continue to face declining market share, which is due to the continued acquisition of physician practices by hospitals and healthcare systems and the preference of newly trained physicians to join them. Milliman consultants Chad Karls and Susan Forray provide perspective in this article.

Reprinted from the Second Quarter 2015 issue of Inside Medical Liability, Physician Insurers Association of America. Copyright, 2015.

Medical professional liability’s slinky effect

The recent medical professional liability insurance market has seen healthy profits for nearly a decade, but has been stuck on the same straight path of lower rates and lower levels of written premium during that time. As MPL companies’ rates continue to slowly erode, the market dynamic is similar to the stop-and-go highway traffic pattern dubbed “the Slinky effect.” While no one in the industry believes the current situation can last forever, any visible change in the current soft market is still some years off. Milliman’s Chad Karls provides some perspective in this article.

This article was first published in Medical Liability Monitor.

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.

The medical professional liability market continues to drift in 2013

Chad Karls, editor of the Medical Liability Monitor’s 23rd Annual Rate Survey issue, discusses the current state of the medical professional liability (MPL) insurance market. The MPL market is still calm, continuing the trend of reduced claim frequency that has been seen over the last decade, with no clear explanation for the decrease. However, some fundamental changes could be on the horizon. Small trends, recent patient safety initiatives, and reform ideas could lead to radical changes in the future. A close monitoring of trends is critical for continued financial success in the industry.

This article was first published in Medical Liability Monitor.