Report: Medical Professional Liability Headwinds Continue Despite Improvement in 2022

A recent report by the Medical Professional Liability Association shows the medical professional liability insurance sector’s combined ratio improved from 108.1% in 2021 to 102.2% in 2022 – marking the industry’s best performance since 2017. However, the industry still has not generated an underwriting profit since 2013, according to the MPL Association.

“Almost all the improvement in the 2022 combined ratio was due to a drop of 5.1 percentage points in the loss and loss adjustment expense ratio, from 82.2% in 2021 to 77.1% in 2022,” said Bill Burns, lead author of the report and MPL Association vice president of research and analytics. “The industry showed no improvement in the accident year 2022 loss and LAE ratio. Therefore, improvement in the industry’s calendar year results is due almost solely to favorable loss reserve development on prior accident years.”

The MPL Association reported that most of the improvement in the combined ratio was due to the performance of the top 20 companies in the space. The combined ratio for that group of companies improved by 6.6 percentage points (to 101.3% in 2022), while the combined ratio for all other companies improved by 3.8 percentage points (to 104.8% in 2022).

Premium Growth

Per the report, in 2022, direct premiums in the medical professional liability space grew by only 5.8% – a drop of almost 50% from the double-digit growth rate seen in 2021. While 18 of the top 20 companies reported premium growth in 2022, the average growth rate was 10 percentage points lower than in 2021.

In 2022, written premiums for physicians increased by 2.6%, which was down from the 8.9% increase reported in 2021. Written premiums for physicians accounted for nearly half of the $11.73 billion in total MPL premium dollars written in 2022.

Based on a review of rate filings submitted to various states, the MPLA found that insured physician exposures for these companies have decreased, on average, by 20% over the last decade. The MLP Association reported that even in the current environment of generally increasing rates, this overall drop in exposures makes premium growth difficult.

Meanwhile, direct premiums written for the hospital segment increased by 13.1% in 2022, and DPW for other professionals increased by 8.3%. Premiums in the “other facilities” sector increased by just 4.6% in 2022 – a sharp turn from the approximately 20% growth experienced each year from 2018-2021.

According to the report, top insurers by direct premiums written in the medical professional liability insurance sector include Berkshire Hathaway Inc. ($2.09 billion), The Doctors Co. ($1.13 billion), ProAssurance Corp. ($717 million), CNA ($633 million) and Coverys ($526 million).

Go Deeper

In the report, the MPL Association listed aberrant verdicts and social inflation, artificial intelligence, private equity and health care and post-COVID-19 human resources issues as factors that can impact both health care and the MPL industry.

Read the full Medical Professional Liability Industry Overview & Analysis on the MPL Association website.