Physician medical malpractice premiums remain flat, continuing a decade-long run of little to no rate increases, new reports show.
Doctors continue to be spared medical malpractice coverage rate increases even as the U.S. medical professional liability insurance sector experiences underwriting losses for the second year in a row, putting “more scrutiny around shrinking reserves,” Fitch Ratings says in its annual report on medical professional liability insurance. But such pressure that also includes plummeting premium revenue hasn’t been enough to force these carriers into jacking up rates, which have been largely stable for more than 10 years.
“As far as medical liability goes, it really is a great time to be practicing medicine,” Medical Liability Monitor Editor Mike Matray says. "Medical liability insurance is often the single most expensive cost of doing business for physicians. At the same time, medical malpractice insurance premiums have been decreasing or flat for more than a decade and malpractice claims frequency is at an historic low."
Industry consolidation, well-capitalized carriers and the shift to outpatient care and telehealth are also among the factors keeping premiums from rising, these new reports show.
“Many other commercial insurance market segments, particularly property and auto lines are showing upward pricing movement in 2018 in response to weaker profits,” Fitch managing director James Auden and colleagues wrote in a new report. “However, competitive forces in the market and abundant market underwriting capacity make it unlikely for material positive near-term rate increases.”
There are many other reasons for stable rates, including medical liability reforms signed into law 15 to 20 years ago in states across the country. The frequency of claims has also fallen as plaintiffs’ attorneys see the pharmaceutical industry, rather than doctors, as their target for triggering the opioid crisis, a new report by Medical Liability Monitor says.
“The main targets for the plaintiff’s bar arising out of the opioid crisis are pharmaceutical manufacturers,” Medical Liability Monitor says in its report. “(Medical Professional Liability) insurers, to date, have not seen a great number of claims against individual physicians related to prescribing opioids.”
It’s still not uncommon for a doctor’s annual malpractice premium to range between $50,000 and $200,000 a year depending on their medical specialty and the state in which they practice, but their rates aren’t rising. “The percentage of (MPL) companies reporting no year-over-year change in rates has been steadily increasing since 2008 ,” The Medical Liability Monitor says.
The trend today is in sharp contrast to the soaring medical malpractice premiums at the turn of the century. It was not uncommon for doctors to see rates jump 25% or more a year with jury awards back then average $3 million on average, forcing companies to leave the business while doctors scrambled to find coverage.
In late 2001, for example, St. Paul Cos., which was the biggest carrier at that time, exited the malpractice insurance business, ending coverage for more than 40,000 physicians, the New York Times reported then.
But the market is much different today with physicians increasingly becoming employees of hospitals or large doctor practices that self-insure, helping these healthcare providers to avoid paying the sizable premiums of 15 and 20 years ago.
Today, the top 10 underwriters of medical professional liability have nearly 60% market share including Warren Buffett’s Berkshire Hathaway, The Doctors Company and CNA Financial, Fitch Ratings said.
“Falling market premiums are largely a function of changing broader healthcare fundamentals,” Fitch Ratings said in its new report. “Consolidation of hospitals and healthcare practices has shifted physician employment toward larger groups, which are more likely to self-insure and use captive or alternative risk programs, reducing demand for primary MPLI coverage.”