The medical professional liability insurance market in the U.S. reversed a four-year trend of weakening in 2021 but still posted a poor combined loss ratio for insurers, according to Fitch Ratings.
After seeing combined losses improve, dropping from 113% in 2020 to 108% last year, Fitch expects insurers will see performance improvements in 2022 due to earned premium growth.
“However, a return to underwriting profitability is less likely given challenges derived from the competitive nature of the MPLI (medical professional liability insurance) market, and uncertainty on incurred loss experience from economic volatility, higher inflation and any post-pandemic revival of litigation activity,” Fitch Ratings said.
The rating agency added that it is concerned about whether or not pricing can keep pace with medical loss cost trends over an extended period. Rate increases across multiple liability lines, including medical professional liability, are slowing.
Medical liability insurers will also face a return to pre-pandemic norms in claims settlement patterns and social inflation. Multimillion-dollar jury verdicts are reshaping societal expectations, which has a significant effect on the medical liability field, according to Fitch.
General inflation trends also add to the future loss severity uncertainty.
Against this backdrop in loss trends, medical professional liability insurers are seeing changing demand, the rating agency reports.
Consolidation in the healthcare space is driving down demand for traditional coverage for independent practices. Large medical facilities tend to self-insure, use captives as a type of self-insurance, or want more specialized insurance coverage. According to Fitch, smaller regional insurers may have more difficulty pivoting to meet this demand.
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