What’s New in Medical Professional Liability?

April 25, 2023

Medical Professional Liability insurance is designed to protect health care professionals from financial loss caused by claims and lawsuits alleging negligence or errors in the provision of medical services. It is specifically tailored for doctors, nurses, home health care aides, and other health care professionals who provide medical care to patients.

Medical Professional Liability insurance is designed to provide financial protection and legal representation to health care professionals in the event that a patient files a lawsuit claiming that his or her care was substandard and resulted in harm, injury, or even death. The coverage helps pay for the costs associated with legal defense, settlements, and judgments awarded to the plaintiff, up to the policy’s limits.

Medical malpractice claims can arise from a variety of situations, including misdiagnosis, medication mistakes, failure to obtain informed consent, and other acts or omissions that deviate from the accepted standard of care. These claims can be complex and expensive to defend, which is why Medical Professional Liability insurance is crucial for health care professionals to mitigate the financial risks associated with such lawsuits.

Medical Professional Liability Trends: Claims Severity, Larger Payouts

In 2010, Milliman created a database to keep track of data from professional liability losses involving hospitals, nursing homes, and long-term care facilities. Its most recent data analysis indicates an uptick in claims severity. According to Milliman, the percentage of claims closed with an indemnity payment of $1 million or more was relatively flat (3% to 4%) between 2008 and 2013 but has gradually increased thereafter to represent about 7% of closed claims. There is an even more significant increase in the percentage of claims that closed with an indemnity payment of $5 million or more, due in part to an increase in third-party litigation funding and the rollback of tort reforms in key states.

States with the highest average claim severities include New York, Illinois, Florida, and California.

The Medical Professional Liability Association (MPLA) underscores Milliman’s findings. The MPLA notes that the average number of claims greater than $7 million has more than doubled in recent years.

As a result of an increase in the frequency of severe claims, insurers are looking for rate adequacy and capacity management and are including additional coverage exclusions. It’s important to note, however, that the type of market adjustments in the Medical Professional Liability space today is nothing like the hard market of the early 2000s. Rates for 2023, for example, according to WTW, have increased anywhere from 5% to 15% (and up to 20% for Hospital Professional Liability).

About One80 Intermediaries/Manchester Specialty:

Manchester Specialty, a division of One80 Intermediaries, is a national specialty underwriting and insurance program management firm, licensed to do business as a program administrator in all 50 states and DC. Our agent/broker partners and their Allied Health clients look to us for our expertise, broad product capability, commitment to the market, and the quality and stability of our insurance programs for Home Care, Medical Staffing, Allied Health and Human Services organizations. For more information, call us toll-free 1-855-972-9399, or visit Allied Health Firms – One80 Intermediaries.