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Insurance buyers face a prolonged difficult market



The medical malpractice insurance market is tough for buyers and is expected to remain so for the foreseeable future.

A particular cause for concern is the rise of telehealth since covid-19, which some say is leading to more claims.

The market is challenging, with premiums and deductibles increasing, capacity limited and coverage limited, says Paula Sullivan,
Chicago-based senior vice president at Marsh LLC.

With $10 million jury verdicts no longer rare and combined ratios exceeding 100%, medical insurers no longer have the same severance reserves as in years past, which “will continue to require real underwriting discipline,” said Pete Reilly, Springfield, Pennsylvania-based North American healthcare executive and Sales Manager at Hub International Ltd.

“The first half of the year has shown some signs of correction, although issuance results are still showing signs of pressure, with rate increases in the 5% to 1

5% range and larger increases in the higher excess stocks, which is where many carriers have experienced significant losses,” said Dan Joyal, vice president at EPIC Insurance Brokers & Consultants in Boston.

Prices are increasing by up to 20%, says Chris Zuccarini, managing director of Risk Strategies Co. Inc.’s national healthcare practice in Radnor, Pennsylvania, which focuses on physician groups. Groups that are a good risk with little adverse claim activity can still find competitive rates, he said.

Sullivan said she expects continued rate hikes in the 5% to 15% range, depending on the state.

Many insurers have reduced capacity significantly, with $15 million of inventory replacing $20 million of inventory, for example, and $5 million replacing $10 million, although capacity remains plentiful, Joyal said.

Insurers are also encouraging their policyholders to increase their retentions or deductibles, particularly in the hospital segment, and this trend is expected to continue, he said.

Meanwhile, “there is growing concern” about telehealth-related claims because of the rapid growth in use of the technology over the past three years, Joyal said.

The claims have “absolutely gone up,” Reilly said. The segment is more risky because of misdiagnosis, which “shouldn’t surprise anyone” given telehealth’s reliance on video screens and phones, he said.

Observers have said that while the use of telehealth technology has declined somewhat since the height of the pandemic, it is expected to remain an integral part of health care.

There are risks with its use beyond the risk of misdiagnosis, experts say.

More telehealth is being administered by physician assistants or other non-physician staff, which “can create problems,” if they do more than they’ve been trained to do, or if they rely too much on them, Zuccarini said.

There are also concerns that doctors aren’t forming personal relationships with patients with telemedicine, increasing the chances of more claims, he said.


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