Medical professional liability in 2023 – how did it fare?
Medical professional liability in 2023 – how did it fare? | Insurance Business America
Professional Risks
Medical professional liability in 2023 – how did it fare?
AM Best delivers the verdict on the segment following mixed developments
Professional Risks
By
Kenneth Araullo
In its latest report, the premium growth for AM Best’s medical professional liability (MPL) composite moderated to 3.6% in 2023, up from a period of market softness and complex industry dynamics.
Despite these developments, the credit agency states that the segment saw overall financial results bolstered by favorable net investment income.
According to the report, the improved underwriting results from previous years did not continue, primarily due to increases in loss adjustment and other underwriting expenses. MPL insurers are contending with ongoing challenges including potential rises in claims costs spurred by social inflation, the erosion of tort reforms, and the increasing complexity of medical care.
Additionally, factors like professional burnout, staffing shortages, and the expansion of alternative care providers might elevate claims frequency.
Sharon Marks, director at AM Best, highlighted the persisting difficulties and their impact on the industry.
“These headwinds, coupled with changes in tort reform, social inflation and continued rising claims severity could impede the segment’s progress,” Marks said. “But these issues are also expected to help focus and maintain the MPL segment’s attention on premium adequacy, underwriting discipline, and prudent reserving.”
In a positive shift, AM Best revised its outlook on the US MPL insurance sector to stable from negative in November 2023. This adjustment reflects improvements across several areas, including rate adequacy, diminishing pandemic-related exposures, persistently redundant loss reserves, higher reinvestment rates, and improved overall returns.
The report also underscores that the MPL composite’s net after-tax income improved significantly in 2023 due to a marked increase in net investment income compared to the previous year. The effects of earlier pricing adjustments began showing in the accident years 2022 and 2023.
Additionally, the sector enjoyed favorable prior year reserve development for the 15th consecutive year, although adjusted for Schedule P reporting distortions, the 2023 development was comparable to 2022.
Despite these positive financial indicators, MPL insurers still face the challenge of a growing frequency of high-severity losses, partly driven by social inflation. This situation underscores the ongoing need for MPL carriers to maintain price adequacy.
What are your thoughts on this story? Please feel free to share your comments below.
Related Stories
Keep up with the latest news and events
Join our mailing list, it’s free!
