The environment for professional liability medical insurance in the US remains challenging despite some improvements in 2021 – Advice Eating

OLDWICK, NJ May 4, 2022–(BUSINESS WIRE)–US Medical Professional Liability (MPL) segment profitability improved significantly in 2021, with net income for AM Best’s composite group of MPL specialists increasing approximately 30%, reflecting realized capital gains due to the favorable situation is attributable to capital market developments, according to a new am the best Report.

However, AM Best notes in his Market segment report by Best, entitled “Tough Environment for US Medical Professional Liability” that it still maintains a negative market segment outlook for the segment given the significant challenges to profitability due to continued weak demand and rising claims cost trends driven by the increasing frequency of High-severity claims are fueled by social inflation and eroding tort reform. These challenges have resulted in persistently high underwriting combined ratios and declining reserve releases over the past decade. However, AM Best believes that the segment’s reserve position now appears to have stabilized with calendar year 2020 reserves. The outlook also takes into account airlines’ inability to quickly settle often complex claims due to pandemic-related court closures and delays, which could further increase claims-related costs.

Direct written premiums for AM Best’s MPL insurers grew 7.5% to $8.4 billion in 2021 after growing 3.1% in 2020 and 4.4% in 2019. This premium growth was significantly driven by price stabilization and the evolving industry dynamics. The report finds that in the five years leading up to 2021, premiums for hospitals, other health professionals, and other healthcare facilities have increased while those for physicians have steadily decreased. “The segment’s core customer base has shrunk in recent years due to physician group and hospital consolidations along with in-hospital physician hiring,” said David Blades, Associate Director, Industry Research and Analytics, AM Best. “Today, many hospitals have their own Prisoner or self-insurance mechanisms.”

MPL segment net investment income declined 11% in 2021, partially offsetting strong realized capital gains and a decrease in underwriting losses. Despite a slight improvement in underwriting results and net income increasing to $932 million, the MPL Composite posted a seventh consecutive year of underwriting losses and a combined ratio of 110.1 for 2021.

“AM Best believes operating and underwriting results are expected to remain under pressure through the end of 2022, despite much-needed rate action improving premium income,” said Sharon Marks, Director of AM Best. “AM Best believes that Underwriting and operating results are expected to remain in question through the end of 2022, despite much-needed rate action improving premium income. coupled with persistent inflation and rising interest rates should limit any improvement in underwriting results.”

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=319635.

AM Best will host an analytical briefing on the state of the MPL insurance sector on May 5, 2022 at 11:00 am EDT, which will be attended by leading market executives and analysts from AM Best. To register for the supplemental event, please go to http://www.ambest.com/conferences/MPL22/index.html.

AM Best is a global rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company operates in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. Visit www.ambest.com for more information.

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contacts

David Klingen
Deputy Director, Industry
research and analytics
+1 908.439.2200, extension 5422
david.blades@ambest.com

Sharon Marks
director
+1 908.439.2200, extension 5477
sharon.marks@ambest.com

Christopher Sharkey
manager, public relations
+1 908.439.2200, extension 5159
christopher.sharkey@ambest.com

Jeff Mango
administration Director,
Strategy & Communication
+1 908.439.2200, extension 5204
jeffrey.mango@ambest.com

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