Next Up: Medical Liability


Coverage for medical malpractice remains one of the more-active areas of excess & surplus coverages. It’s about to get even more active.


“When there’s change afoot within the Surplus Lines industry, the wholesale community really gravitates toward that change and creates solutions. National health care is going to create a tremendous amount of opportunity in the medical liability space.” Matthew Power, Lexington Insurance Company


Coverage for medical professional liability has not escaped the soft market and the weak pricing environment affecting nearly all excess and surplus markets. But the 800-pound gorilla remains the federal health reform, the impacts of which are only beginning to be felt within the U.S. medical system.


Changes have barely started, but it’s likely to spur greater demands for more-sophisticated coverage. “You’ll see small physician groups being incentivized to roll up into larger and larger organizations,” Matthew Power said. “You’ll see a greater emergence of medical specialties, such as specialty hospitals that emerge from the new plan. That space over the next 24 to 36 months is going to create a lot of new opportunities.”


One impact may be continued roll-up of smaller liability-based organizations into larger risk entities, Power said. The new federal regulations will bring more patients into the mainstream of medical treatment, threatening to overwhelm current medical personnel and facilities.


Without relief on the legal front, doctors and organizations will have little choice to practice defensive medicine to avoid claims that they did not adequately employ testing, technology or screening, adding to costs, panelists said.


The changes will also directly affect brokers, whose commissions and fees are usually included within health insurers’ expense ratios, meaning they will come under pressure as regulations begin to restrict overall medical loss ratios.


Copyright © 2010 by A.M. Best Company, Inc. All rights reserved. No part of this report may be reproduced, stored in a retrieval system or transmitted in any form or by any means; electronic, mechanical, photocopying, recording or otherwise.


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