Learning from the past and remaining on top of developing trends could be the key to keeping medical professional liability insurance rates affordable
— Medical malpractice expenses reached their highest point in well over a decade last year according to figures from the United States Department of Health and Human Services' National Practitioner Data Bank. This is an indication of both more malpractice claims evolving into full-blown lawsuits and higher payouts among those found in favor of the plaintiff. Some market analysts expect this could lead to an unsettling repeat of history for practitioners and healthcare facilities in terms of medical professional liability coverage.
Looking back at Recent History
Based on a report from the Center for Insurance Policy and Research, the medical professional liability insurance cost containment ratio reached a peak for policyholders in 2001 following a five-year upward trend. Rising insurance coverage costs for medical professionals and facilities was driven by numerous factors, including an uptick in malpractice claims and payouts during that time as well as a declining economy, surging interest rates, underwriting losses among coverage providers and inadequate loss control plans to name a few.
In response to this development, several states across the nation began developing legislature to help lower the costs of insurance designed to protect against malpractice suits for healthcare professionals and coverage providers alike. Some of these measures included stricter regulations on the types of evidence allowed in malpractice suits, caps on certain types of damages awarded to plaintiffs and restrictions on attorney fees.
Though many of these proposed changes were signed into law on a state-by-state basis, some were shot down before even getting off the ground. That being said, those regulations to successfully rise through the ranks did appear to have a positive effect on insurance rates. Authorities point out improved risk management procedures and widespread tort reform were largely responsible for the downturn as well.
Examining the Current Figures
While the costs of medical professional liability coverage came to a head in 2001, the number of malpractice claims continued to rise until 2004 before beginning a steady decline until 2012. From another perspective, interest rates also fell somewhat consistently during that time frame. At present, though, analysts are noting a certain sense of deja vu.
Malpractice payouts surpassed $4 billion last year, reflecting an annual uptick of more than $200 million from 2012 onward. Interest rates are also climbing and have been since 2015. Four individual rate hikes took place during 2018 alone.
Preventing a Repeat
With two of the primary driving forces behind the previous insurance rate spike already in place, a number of coverage providers are taking measures into their own hands to ensure policyholders are not forced to once again deal with higher costs of coverage moving forward. For the most part, those being proactive in the movement are looking into revising their underwriting procedures and enforcing new loss control plans. In light of these measures, healthcare providers may not see policy information change quite as dramatically as it did during the last cost crisis.
In a Nutshell
Due to the legislative revisions of the early 2000s, medical professional liability coverage has been more affordable for healthcare providers and less risky for underwriters. While coverage is not technically a legal requirement for practitioners and medical facilities, the majority choose to have such policies in place. Considering the long-running uptick in malpractice cases, this would be an advisable protective measure.
In an attempt to help safeguard those in the healthcare field against the possibility of coverage costs reaching or exceeding their previous peak, certain insurance providers are springing into action. Staying on top of the latest trends and cost factors in the insurance industry could certainly be the key to reducing expenses for everyone involved.
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