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Insurance buyers face prolonged difficult market

Posted On: Oct. 5, 2022 12:00 AM CST


The medical malpractice insurance market is tough for buyers and is expected to remain so for the foreseeable future. 

One particular cause for concern is the increase in telehealth since COVID-19, which some say is leading to more claims.

The market is challenging, with premiums and deductibles increasing, capacity constrained and coverage restricted, said Paula Sullivan,
Chicago-based senior vice president at Marsh LLC. 

With $10 million jury verdicts no longer rare and combined ratios in excess of 100%, med mal insurers no longer have the same reserve redundancies to draw upon as in past years, which “is going to continue to require real underwriting discipline,” said Pete Reilly, Springfield, Pennsylvania-based North American healthcare practice leader and chief sales officer at Hub International Ltd. 

“The first half of the year has shown some signs of correction, although underwriting results are still showing signs of pressure, with rate increases in the 5% to 15% range, and larger increases in the higher excess layers, which is where many carriers have experienced significant losses,” said Dan Joyal, vice president at EPIC Insurance Brokers & Consultants in Boston.

Rates are increasing by up to 20%, said Chris Zuccarini, managing director of Risk Strategies Co. Inc.’s national health care practice in Radnor, Pennsylvania, who focuses on physician groups. Groups that are a good risk with little adverse claims activity can still find competitive rates, he said. 

Ms. Sullivan said she anticipates continued rate increases in the 5% to 15% range, depending on the state.

Many insurers have significantly reduced capacity, with $15 million layers replacing $20 million layers, for instance, and $5 million replacing $10 million, although capacity remains abundant, Mr. Joyal said.

Insurers are also encouraging their policyholders to increase their retentions or deductibles, particularly in the hospital segment, and this trend is expected to continue, he said. 

Meanwhile, “there is growing concern” about telehealth-related claims because of the rapid growth in the use of the technology over the past three years, Mr. Joyal said.

Claims have “absolutely gone up,” Mr. Reilly said. The segment is riskier because of misdiagnoses, which “shouldn’t surprise anyone” given telehealth’s reliance on video screens and phones, he said.

Observers have said that while the use of telehealth technology has declined somewhat from the pandemic’s height, it is expected to remain an integral part of health care.

There are risks inherent in its use in addition to the risk of misdiagnosis, experts say.

More telehealth is being administered by physician assistants or other nonphysician personnel, which “may give rise to issues,” if they are doing more than they have been trained for, or are relied on too much, Mr. Zuccarini said.

There is concern as well that doctors are not forming personal relationships with patients with telemedicine, which increases the chances of more claims, he said.