Thanks To Tort reform & Patient-Safety
Push, Med Mal Performing well
Positive trends mean profits with 81.4 combined ratio for the line
By CHAD HEMENWAY
Medical-malpractice insurers are njoying profitable results, even though rates are decreasing. “It’s a good time to be in this
line of business,” says Robert Allen, senior vice
president of medical-professional liability for
Torus. “Underlying trends have kept the line
profitable, and on the underwriting side, everyone remains disciplined.”
“it’s a good time to be in this line of business.
Underlying trends
have kept the line
profitable, and on
the underwriting
side, everyone
remains disciplined.”
Robert Allen senior vice president of
medical-professional liability for Torus
“I haven’t seen any
major shift in limits,”
he adds. “Capacity and
terms have been man-
aged.”
According to a
special report from
rating-agency A.M.
Best Co., the combined
ratio among medical-
professional-liability
insurers was 81.4 in
2010 compared to 95.2
in 2006.
Tort reforms and improvements in patient safety have
dropped the frequency of claims
since about 2004, says Rob Francis,
COO at The Doctors Co.
But Francis says The Doctors
Co. is seeing severity of claims
increase moderately, eliminating the benefits of the frequency
decline.
While the marketplace appears
to be seeing price decreases overall, Francis says, for his part, “We
expect pricing to begin to flatten
and even rise modestly in some
venues over the next year or two.”
LoSS-Con TroL eFFor TS
Health providers are focusing
more on risk-management programs and following more stringent
standards for patient care since
healthcare reform passed, as grades
for facilities are made more publicly
available.
Providers are also investing
more in technology, such as pro-
grams to keep track of prescriptions
(which helps avoid allergic reac-
tions and the adverse effects when
certain medications interact with
each other).
Healthcare providers are
simply better than they were
five or 10 years ago, offers Allen,
because of the public accessibility
to grades.
“Historically the attention to
quality was not there,” he says. Now
the healthcare industry does not
put quality, patient safety and risk
management in silos, Allen says.
“Everything is now inte-
grated, and it’s benefitted every-
one—keeping costs down and
premiums down, while efficiency
improves.”
does this impact the risk profile?”
Hospitals may roll the new risk
into captives or a self-insurance
program until enough data on the
integration of new doctors is avail-
able in order to underwrite, Junod
adds.
TrenD awa Y FroM
SoLo DoCTorS
Trends in the market include a
shift away from insuring the individual physician.
“Those days are over,” says
Allen, as individual doctors and
those in small practices are joining
hospital organizations. Healthcare
systems are also combining to
form “joint-defense opportunities”
against medical-malpractice lawsuits.
“They are now on the same
team, with the same deep pocket,”
Allen says.
However, the moves present
underwriting challenges.
Tor T reForM
Medical-professional-liability
insurance providers are also keeping a close eye on tort reform—
especially caps on non-economic
damages. The caps in many states
that pass them are challenged and
some have been overturned.
“In the states that have put
caps on non-economic damages,
the assault on them is continuous,”
says Francis of The Doctors Co.
In states where caps are
in place, such as in Texas, the
health (and insurance) costs have
decreased, and more physicians
offer their services, he says.
“Caps are very
effective and have
been a critical part of
the health system, as
well as a critical part
of a robust and competitive marketplace
for medical-professional-liability insurance,” Francis says.
Having the
caps allows insur-
ers to establish
“Threats to overturn caps are a
concern to us,” says Gabel. J
“Healthcare providers want o be named among
the top facilities in the
country. This has had
a positive impact on
medical malpractice,
and the best hospitals
are receiving good treatment in the
[insurance] marketplace.”
Kevin Junod, executive vice president and healthcare
practice leader in the Northeast for broker Lockton
“It presents a different risk,”
says Junod. “Insurers need to take
into account this underlying-expo-sure change. What’s the loss history
[of the new physician(s)]? How
