Inflation Added $4B to Medical Malpractice Losses, Study Finds

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Economic and social inflation has added $4 billion in insured losses and expenses to the medical malpractice insurance market over the past decade, according to a new study.

The study is part of an annual series of studies commissioned by the Doctors Company, a physician-owned medical malpractice insurer, part of TDC Group. The study, Nuclear Verdicts and Rising Costs: How Inflation Is Impacting Medical Malpractice Claims, shows the $4 billion in losses from inflation represent 11% of booked losses for the decade ending in 2024.

This was up from the $2.4 to $3.5 billion found in the company’s 2023 research report, which addressed the impact of social inflation on medical malpractice claims for the decade ending in 2021.

The latest report shows the impact of inflation is accelerating.

The data show higher average payouts and a greater share of claims exceeding $1 million and $2 million. Inflation-adjusted payouts on $2 million and above claims rose from 15% of total dollars in 2013 to 24% in 2023, according to the report.

It’s having an impact on medial malpractice insurers.

Even after adjusting for economic inflation, claims in excess of $2 million have grown since 2014, proving that social inflation is driving higher claims, the report shows.

The key contributors of social inflation include third-party litigation financing, a rollback of tort reforms, increased attorney advertising, legislative changes to statutes of limitations, and more frequent nuclear verdicts, according to the report.

Key findings in the study include:

Combined economic and social inflation added $4 billion in losses—up $1.6 billion from the previous estimate.
Reports of claims exceeding $2 million have increased more than tenfold since 1990.
The frequency of high-dollar claims rebounded sharply in 2023 after a pandemic-era dip.

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