After several years of pricing stability and, in many cases, decreasing premiums, Medical Professional Liability (or Malpractice Insurance) premiums are continuing to rise across the medical industry.

The impact from the pandemic on healthcare continues to provide challenges throughout the industry. While most carriers are excluding COVID-19-related coverage, many continue to be concerned about the industry’s inability to predict and model for coronavirus exposure. Carriers also are concerned about the prospect of class-action lawsuits alleging negligence in preparing for the pandemic, and related defense and claim settlement expenses.

Underwriting requirements continue to tighten and capacity concerns loom across the industry. Diminished access to provider facilities and the continued moratorium on in-person meetings have created a virtual underwriting environment. Insureds who present most effectively to the underwriter in this new reality will increase their likelihood for obtaining better coverage with fewer restrictions. 

Hospitals have historically operated emergency rooms, inpatient and outpatient beds, and intensive care units. Today, a hospital’s expanded operations frequently include physician practices, rehabilitation units, behavioral units and nursing home operations. In addition to traditional patient and environmental exposures, hospital-based employees are still exposed daily to the threat of COVID-19. Hospitals must continue to take all precautions to combat contamination and spread. Adequate COVID-19 protocols continue to be a top priority for underwriters.

Hospital Professional Liability

•  Pull back of capacity by excess liability carriers
• The recent exit by CNA Insurance Company from the space
• COVID/Pandemic Exclusion, Punitive Damages Exclusion, Sexual Abuse & Molestation (SAM) Exclusion and Class Action Exclusion are all being added and considered on most deals
• Higher attachment points and increased retentions
• Very similar trends to Long-Term Care market

Property

• Insureds with no claim activity: flat to 10% increases
• Insureds with claim activity/high hazard geography: 10%-25% increases
• In locations with a significant wind, water or earth movement catastrophe (CAT) exposure, depending upon the loss modeling, we anticipate rate increases of at least 20%-25%

The long-term care and assisted living segment of the Healthcare Professional Liability marketplace has been especially affected this year by the hardening insurance marketplace and COVID-19-related challenges. This comes on the heels of last year’s double-digit rate increases for many providers. We anticipate the premium correction to continue for the remainder of the year.

Beyond pricing implications, providers are focused on program structure, i.e., higher retentions, limit caps and policy coverage exclusions. Most carriers are implementing some form of COVID-19, Communicable Disease and Pandemic exclusion, or charging additional premiums for these coverages on General Liability and/or Professional Liability policies. We’re also seeing more Residents’ Rights and class-action exclusions. Finally, there are fewer carriers, since many have limited coverage or have exited the space altogether.

States such as California, Arizona, Kentucky, Florida, New York and New Jersey will continue to face challenges related to price and coverage, as will some counties in Michigan, Illinois and Tennessee.

Long-Term Care and Assisted Living pricing expectations based on facility location:

Professional Liability

• 5% to 20% minimum increase for good-performing accounts in favorable venues
• Higher attachments point for Self-Insured Retentions (SIR)
• COVID/Pandemic Exclusion on essentially all placements
• Punitive Damages and Class Action Exclusions are being added, depending on the account and venue  
• Reduction of excess liability capacity
• Introduction of SAM Exclusions or sub-limits in excess
• Introduction of written demand and sentinel event coverage trigger
• Increased claims severity (larger expenses and larger settlements)
• Higher claims frequency as facilities start to reopen and family members see their loved ones for the first time in many months
• Non-recognition of erosion wording starting to show up in excess layers for non-follow form coverages related to COVID-19 coverage.

Workers’ Compensation

• Insureds with limited claim activity: 0% to 10% rate increases
• Insureds with claim activity: 10% to 25% increases

Management Liability/Directors and Officers Liability

• Diminished carrier appetite for high limits by a single carrier
• Lower primary limit offerings
• Lower excess limit offerings
• 15%+ premium increases

Automobile

The transportation/automobile market for long-term care has become challenging. Fewer carriers are taking on this exposure. Carriers actively writing coverage in this space are pricing at higher year-over-year rates.

• Anticipated auto renewal rates with zero or few claims: 10% to 15% increase
• Anticipated auto renewal rates with claim activity: 25% to 50% increase

Property

• Depending upon construction and geography, we expect rate increases of 10% to 25%
• In locations with a significant wind, water or earth movement catastrophe (CAT) exposure, depending upon the actual losses and loss modeling, anticipated rate increases of 20%+

The independent physician group industry is preparing for lasting change after the pandemic. Following widespread consumer adoption of telemedicine, many groups, start-ups and large healthcare systems have embraced it as an important option for healthcare delivery, although the long-term impact from an insurance perspective is unknown.

The large medical malpractice and cyber liability insurance companies have allowed telemedicine coverage based on state guidelines. We expect to see continued guidelines and exclusions from carriers that will resemble those seen by other businesses with regard to data protection. The first big item is a requirement to use Dual Factor Authentication (2FA) for cyber liability to make Protected Health Information (PHI) with a semi-remote workforce more secure. Practices must adhere to these guidelines in order to remain covered.

As the number of claims rises, cyber liability continues to be a topic of concern in healthcare. Cyber criminals continue to target healthcare over all other industries, employing schemes such as fraudulent wires and invoices, data breaches and ransomware attacks. In 2021 Physician Medical Malpractice Insurers are continuing to right-size their books by seeking adequate statewide increases in more challenging states, such as Florida, Georgia, South Carolina, Alabama, Kentucky, West Virginia, Maryland, Delaware, Connecticut, Rhode Island, New Hampshire, Illinois, Iowa, Minnesota, New Mexico, Montana, Oregon and Alaska.

Medical Malpractice

• 5% to 15% state-wide increases for challenging states
• 10% to 30% increases for clients with challenging claims history
• States that remain profitable for insurance companies can expect flat renewals in absence of claims

Property and Casualty

• Flat unless catastrophic risk is applicable
• Many markets are strengthening virus and communicable disease exclusions

Workers’ Compensation

• Flat and still a soft market
• Some national carriers are still not offering coverage on new business for practices performing COVID-19 testing or not applying schedule credit

Management Liability (D&O, EPL)

• Employment Practices Liability rates are increasing 5% to 10%. Carriers are asking many additional employment questions as the impact of layoffs and furloughs lead to employment lawsuits in healthcare
• Publicly traded physician-based businesses can expect 10% to 30% increases on management liability as a whole

Cyber Liability and Regulatory E&O

• Some MGA programs for smaller groups remain flat while programs intended for larger groups with higher limits are implementing increases and lowering limits for groups with limits above $5 million
• Carriers are requiring additional underwriting and implementing data protection guidelines resulting in exclusions

• Rate push not as significant as hospitals and long-term care
• Lower attachment point programs still available on certain risks
• Occurrence capacity not as readily available as in years past
• COVID/Pandemic Exclusion not mandatory by all carriers
  • Some carriers applying COVID/Pandemic Exclusion to GL only
• Hired and Non-Owned Auto continues to be a challenge for several classes (re: home health/hospice)
• Most challenging classes
  • Correctional Medicine
  • Locum Tenens – Significant reduction in capacity due to carriers deciding to exit the space (re: Markel and RSUI)
  • Healthcare staffing
    • Significant rate push
    • Continued carrier exits
    • Increased claims frequency/severity
• Ambulance
  • Package markets starting to be more competitive on cleaner accounts due to the positive impact the pandemic has had on the class (re: ambulances were grounded, which improved underwriting results for many carriers on Auto and GL/PL lines due to reduced exposure).
  • As a result, package markets are seeing a 5% to 10% rate push compared with a higher rate push in the E&S market, which is due to the influence of other healthcare lines written by E&S markets.