Hardening Market Impacts Professional Liability Insurance Rates in Health Care

The insurance market continues to harden as evidenced by last month’s renewals with rate increases experienced across commercial property and liability lines. Catastrophic property losses and social inflation – broader definitions of liability, friendlier plaintiff legal decisions, and escalating liability damages verdicts – have prompted insurers to tighten underwriting requirements, cut back on capacity and increase premiums. In some cases, depending on the industry, coverage line, geographic location and the individual account’s loss experience and risk profile, agents and brokers are seeing double-digit increases for clients. 

Moreover, insurers in an effort to gain underwriting profitability are carefully looking at the amount of limits they are willing to write on an account and analyzing coverage sublimits, deductibles and policy terms. Some insurers are reducing their limits between 20% and 50% on the Liability side while others are retreating from writing Commercial Property insurance in catastrophe-prone areas. 

Professional Liability Rates in Health Care on the Rise

The health care industry, in particular, is experiencing higher Professional Liability/Medical Malpractice insurance rates. Long-term care facilities, for example, have been hit by the hardening market due to an increase in claims frequency and severity and high jury verdicts. According to an article in Risk & Insurance, insurers see millennial jurors as playing a role in the higher verdicts and “driving up insured losses in the Professional Liability space.” Anti-corporate sentiment in part is reflected in the high verdicts in malpractice cases, with jurors looking for a way to right perceived wrongs. In fact, average payouts for medical Professional Liability claims, according to Risk & Insurance, are at an all-time high; the highest settlements have reached more than $100 million.

As a result, insurers are taking a close look at systemic risks throughout organizations in the health care industry – from the opioid crisis to allegations of sexual abuse and molestation, and cyber-related attacks – to limit their exposure to these risks. Carriers are either limiting or clarifying language, changing sublimits, or excluding coverage for certain exposures in their Professional Liability forms. 

How Should Agents Approach the Hard Market with Clients?

Communicate to clients about the challenging insurance market to help manage expectations. Talk to clients well in advance of their renewals and keep them up to date, as the state of the market is very fluid and can change from quarter-to-quarter. Also, make sure your clients understand the impact of their organization’s risk picture on premiums, the limits available, and any changes in policy terms and conditions. Stress the importance of risk management and loss control to help prevent claims and improve a client’s risk profile. 

Talk with us as well about how we can help you secure coverage for your health care clients in an increasingly tightening market. Manchester Specialty Programs specializes in providing agents and brokers with totally integrated business insurance solutions to meet the needs of Home Care, Allied Health and Human/Social Services organizations. We provide General Liability, Entity Professional Liability, a Package policy, and other key coverages, and have the experience needed to navigate this space through all insurance market cycles.

For more information about how our products and services can help protect your insureds, please contact us at 855.972.9399.