Tag Archives: medical professional liability

State of the medical professional liability market

The year 2019 marked a turning point for the medical professional liability (MPL) insurance industry. Reserve releases declined to less than 5% of premium. Insurers projected a combined ratio over 120% on 2019 earned business. Frequency increased for many writers and the trend in indemnity severity was above inflation. In response, insurers began to take rate action, manifesting in growth in direct written premium that exceeded inflation for the first time since 2005.

Despite significant underwriting losses, the MPL industry returned double its net income for the year as dividends to policyholders. Policyholder dividends show little sign of declining as the MPL industry remains well-capitalized and able to fund policyholder dividends with investment income.

To learn more about the current state of the MPL market, read this article by Susan Forray and Chad Karls.

The final wave: The effect of the coronavirus on the MPL industry

Physicians nationwide have begun to brace for the impact of the coronavirus on the healthcare industry. While the health of the nation and world is of primary importance, the medical professional liability (MPL) industry has begun to consider the impact on providers from related MPL claims. Healthcare providers, facilities, and MPL writers can expect direct and indirect impacts from the coronavirus pandemic—with the indirect impact possibly proving more impactful over the long term.

Paradoxically, the more we as a society are able to address and slow the spread of the coronavirus, the more the MPL industry may see related claims. It might be difficult to allege malpractice against a hospital short on ventilators when thousands of other hospitals are short as well. But if the spread can be slowed to a rate at which most hospitals have the capacity to handle these cases (at least under a crisis standard of care), it may be easier to allege malpractice against those hospitals with overwhelmed emergency departments or that experience adverse results relative to others.

According to a study from Wuhan, China, which began in December 2019, 13.5% of patients hospitalized with the coronavirus developed a hospital-acquired infection.[1] The more typical rate among hospitalized patients in China is less than 5%.[2] The rate of hospital-acquired infection is typically greater among patients with respiratory conditions[3] and hospital-acquired infections are only one measure of complications from treatment. However, this information suggests one way in which facilities or providers may be subject to allegations of medical liability.

As the healthcare system reaches capacity, many providers will work outside their areas of expertise to treat affected patients. In typical circumstances, doing so would be rife for allegations of malpractice. Whether that can happen under a pandemic may depend on the interpretation of Good Samaritan laws, which vary in wording by state.[4] MPL writers should consider consulting with their legal advisers and taking steps to ensure that these laws appropriately address pandemics.

More concerning may be the impact of the coronavirus on claims after the pandemic is over. Patients are now delaying nonessential medical care as part of social distancing. Some patients will experience adverse impacts from delays in treatment whether the delay occurred from social distancing or a provider called upon to address greater medical needs. These delays can complicate future medical treatment, possibly in severe ways that the patient may not anticipate. Healthcare providers may experience MPL claims alleging failures to provide appropriate medical care to patients with less immediate need. In reviewing Good Samaritan laws, MPL writers should ensure healthcare providers are appropriately protected from such claims. A March 15, 2020, editorial in the Washington Post urged legislators to enact such a change, citing emergency physicians who may need to turn away patients in order to maintain available beds for more urgent needs.[5]

More pressing for physicians and other healthcare workers currently may be the risks to their own health. Providers are among the most at risk for contracting the coronavirus given their contacts with sick patients. Among working physicians, 20% are 65 or older[6], the age group most at risk for complications from the coronavirus (this compares to 16% among the general population[7]).

One study found the case fatality rate from the coronavirus in this age group to be about 8%[8], but this understates the prospective impact on healthcare as many survivors may have decreased respiratory capacity and may be unable to work prospectively.[9] Data on the complication rate from surviving the coronavirus is difficult to come by, in part because it can best be measured over the long term. Complication rates in this older demographic between 20% and 25% would reduce the number of working physicians by 5% by the end of the pandemic. Hence the ultimate impact of the coronavirus on the MPL industry may be not in direct claims or even the second wave of delayed-healthcare claims that follows. It may be in a healthcare industry materially compromised by the disease caused by the coronavirus and its associated complications.

[1] https://www.thelancet.com/journals/lanres/article/PIIS2213-2600(20)30079-5/fulltext

[2] https://www.ncbi.nlm.nih.gov/pubmed/28325579 and https://www.sciencedirect.com/science/article/pii/S1201971214015392

[3] https://erj.ersjournals.com/content/48/suppl_60/PA4912

[4] https://recreation-law.com/2014/05/28/good-samaritan-laws-by-state/

[5] https://www.washingtonpost.com/opinions/2020/03/15/make-this-simple-change-free-up-hospital-beds-now/

[6] Estimated from data at https://www.statista.com/statistics/415961/share-of-age-among-us-physicians/

[7] https://www.statista.com/statistics/270000/age-distribution-in-the-united-states/

[8] http://www.cidrap.umn.edu/news-perspective/2020/02/study-72000-covid-19-patients-finds-23-death-rate

[9] https://nypost.com/2020/03/13/coronavirus-survivors-may-suffer-from-reduced-lung-function/

How to lower defense costs using analytics (infographic)

For medical malpractice insurers, market pressures continued in 2018 despite overall profitability, according to a May report by AM Best. One way to combat potential headwinds is by lowering defense costs using advanced analytic techniques. In 2017, NORCAL Group began using Milliman’s Datalytics-Defense®, which uses proprietary data-mining techniques to analyze companies’ defense cost invoices and produce actionable insights. The results shown in the case study infographic below demonstrate the extent NORCAL was able to reduce their defense costs, all the while maintaining their overall claims-with-payment ratio.

Underwriting income for MPL continues to decline, with faint signs of a firming market on the horizon

The medical professional liability industry’s long-term trend of declining frequency appears to have ended several years ago. Since then, we have seen the reporting of claim counts stabilize for most companies, with some volatility evidenced for certain writers and both increases and decreases seen. Per annum trends in defense costs remain in the mid-single digits. Milliman’s Susan Forray and Chad Karls provide more perspective in this article.

This article was published in the Second Quarter 2019 issue of Inside Medical Liability.

Midyear 2018 financial results for composite of medical professional liability specialty writers

In this article, Milliman’s Eric Wunder and Brad Parker summarize some key financial results for a composite of medical professional liability specialty writers through the second quarter of 2018. The 12-year decline in direct written premium finally reversed course in the first quarter of 2018 and second quarter premium levels have followed suit. The composite brought in $102 million (3.6%) more premium through six months than through the first six months of 2017. This is the largest year-over-year increase in written premium since December 2005.

This article was originally published in the September 2018 issue of Medical Liability Monitor.

Major challenges for medical professional liability

The medical professional liability (MPL) insurance industry has experienced its most extended period of profitability over the last decade. But the last two years have seen the industry’s combined ratio creep up to 100% and over. This article by Susan Foray, Paul Greve, and Richard Henderson provides an overview of the state of the MPL insurance industry through the first half of 2018, focusing on key MPL environmental factors, MPL litigation trends, and MPL industry financials.

This article was originally published in the Third Quarter 2018 PLUS Journal, a publication of the Professional Liability Underwriting Society.