Report: U.S. Medical Professional Liability Insurance Underwriting Loss Widens

Underwriting losses for U.S. medical professional liability insurance rose significantly in 2023, underscoring the increased loss-cost volatility tied to litigation risk, a report out this week from Fitch Ratings shows.

The MPLI segment posted an underwriting loss for the eighth consecutive year in 2023. The industry’s statutory combined ratio rose to 109.6%, reversing a recent trend of performance improvement. Net written premium growth slowed to 4% in 2023 from 6% for 2022, according to the report.

Fitch said pricing trends is still positive for MPLI specialists, “but their ability to move toward breakeven underwriting results and increase returns on capital amid market competition remains uncertain.”

According to the report, strategic challenges and limited growth opportunities in the market are due to long-term changes in healthcare. Policy counts for individual providers and premiums are being pressured by market consolidation and physicians shifting to employment with larger medical groups and hospitals that are more likely to self-insure.

Another contributing factor is concentrated business profiles by product and geographic mix, which Fitch said inhibit the ability for MPLI specialists to profitably deploy capital through diversification and improve performance, leading to a greater emphasis on retaining existing business rather than rate adequacy.

Projecting ultimate losses in MPLI is difficult due to their low-frequency/high-severity nature, a challenge Fitch said has been compounded in recent years by disruption in claims reporting and closing patterns because of the pandemic and increases in loss severity due to higher general and social inflation.