Medical Liability Monitor's 2010 Rate Survey Indicates Tougher Times May be Ahead for Medical Professional Liability Insurance Market

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Since 1991, Medical Liability Monitor—an independent industry newsletter—has been surveying the leading providers of medical professional liability insurance (MPLI) for its annual rate report. This year’s survey reports rates from more than 40 companies that represent as much as 75 percent of the physician’s malpractice insurance market. It is the most comprehensive report on MPLI premium rates available.

At first glance, this year’s Rate Survey depicts another year of flat premiums—with 67 percent of rates holding stable between 2009 and 2010. But a closer look suggests there may be tougher times ahead for the medical professional liability industry.

Rates for physicians’ 2010-2011 liability insurance premiums remained largely unchanged for the majority of doctors, according to Medical Liability Monitor’s nationwide Annual Rate Survey released this week.

At first glance, this year’s Rate Survey depicts another year of flat premiums—with 67 percent of rates holding stable between 2009 and 2010. But a closer look at the responses to the Rate Survey suggests there may be tougher times ahead for the medical professional liability insurance (MPLI) industry before things begin to get better.

“Despite declining—or stagnant—premium rates since 2006, unusually strong underwriting results in recent years have had a very strong, positive effect on the MPLI industry’s balance sheet,” said Michael Matray, Medical Liability Monitor editor. “As Chad Karls—the actuarial/author behind the Executive Summary in this year’s Rate Survey—points out, the precipitous decline in claims frequency that began between 2002 and 2004, which has largely continued through the present, has been at the root of the industry’s currently strong financials. That seems to now be changing with certain data sets showing an upward trend in claims frequency. If claims frequency does spike, and rates remain flat, it could spell a period of difficulty for the industry.”

In this year’s Rate Survey, Medical Liability Monitor asked participating companies for their take on the potential implications of the Patient Protection & Affordability Act healthcare reforms for the MPLI industry. Surprisingly, respondents exhibited little concern.

“Only 31 percent of respondents believe this year’s healthcare reforms will increase claims frequency or severity,” Matray said. “Sixty percent believe it will either have no effect or they simply don’t know how it will affect the industry.”

A new concern reported in the responses to this year’s Rate Survey Questionnaire was the increased use of self-insurance and/or captives as an alternative to the traditional MPLI market. Also, there appears to be concern over the related trend of hospitals purchasing practices and rolling the physicians exposure into their self-insured programs.

Medical Liability Monitor is the only independent publication reporting exclusively on medical professional liability insurance. The monthly newsletter, founded in 1975, has conducted the annual rate survey since 1991. To order the rate survey or to subscribe, go to http://www.mlmonitor.com or call 312-944-7900.

Complete Rate Survey available to the press upon request.

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Mike Matray
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