Written by David Huss @ Ethos Insurance Partners
As 2021 comes to a close, I wanted to provide you with a healthcare professional liability (HPL) forecast for the medical services industry. The HPL space has been in a firming trend for nearly two years now, and that trend will continue. The next six to twelve months will be challenging, and Ethos is ready for it.
Standard Risk Physicians
I expect only modest rate increases in most states through 2022. Why? For starters, competition is stiff, and this isn’t likely to change anytime soon. Right now, carriers are mostly looking to counter negative claim-related development on a specialty and/or jurisdictional basis.
The company ProAssurance is of particular interest in this space. They are now the third-largest writer of physicians’ medical malpractice in the US. They are also a publicly-traded company, which is a major contrast to the mutual model taken by many medical malpractice writers in the US. What does this actually mean? Management is held to the highest standards of accountability by investors.
As a publicly-traded company, ProAssurance’s acquisition of NORCAL was completed in May 2021. Management will not delay the implementation of their plans as they relate to any necessary modifications to the previous NORCAL book. This could impact other states and regions around the country.
Miscellaneous Physicians
In a recent article, I provided a forecast for non-standard physicians. Check it out for our forecast for this class of business.
Physician staffing was among the first classes of physicians’ med-mal business to begin firming, and so we have already seen significant rate increases with this class of business. Still, I expect an average rate increase of between 10% – 15% over the next twelve months. However, there are always aberrations. In this case, specialty and jurisdiction could prompt significant departures from our projection. It’s also important to keep an eye on risks with nursing home/correctional medicine exposures. Mandatory minimum deductibles for risks with even small exposures in these areas are at risk of spiking.
These days many physician-driven correctional medicine risks are virtually uninsurable. This is especially true for those utilizing a staffing model. As such, it is impossible to provide any credible projection for this class. However, it is worth noting that we are starting to see a small amount of capacity returning to this class of business on a very selective basis. Look for risks where physicians are contracting directly with local/county facilities to lead the way out of this challenging space in the coming years.
Hospitals
Volatility is the name of the game for hospitals – it always has been. The departure of Zurich (and much more recently CNA) from this space highlight this continuing trend.
The claim experience is also volatile with this class of business. Frequency remains fairly stable these days, but severity continues to increase. What does that mean for you? Carriers will likely push a 10% average rate increase on primary and excess placements over the next year. Prepare for significantly higher rate increases in some jurisdictions and from carrier to carrier.
Miscellaneous Medical Facilities
Throughout a 15-year soft market cycle, miscellaneous medical facilities went the softest. Even with this factored in, this sector performed best for most carriers. I expect to see rate increases that range between 5-10 percent over the next twelve months.
Ethos Insights
COVID remains a significant source of uncertainty for carriers in the HPL arena. Claim-related developments, as a result of COVID in the coming year, could have a significant impact on these forecasts.
