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Medical Professional Liability 'Super Losses' Are On the Rise

By Meg Green
A.M. Best Company, Inc.

The overall cost and frequency of so-called "super losses" — losses greater than $50 million — in the U.S. medical professional liability insurance market are on the rise, according to Hiscox.

"We used to see truly catastrophic losses once a year. Now we are seeing them more regularly," said Ian Thompson, senior vice president of health care for Hiscox.

While hospitals have improved quality and patient safety measures, "the bigger losses are getting bigger," Thompson said. "What we have seen in the last 18 months warrants more discussion and consideration."

Seven U.S. states in 2011 declared their largest ever medical malpractice awards in cases ranging from inadequate staffing at nursing homes to medical negligence in hospitals, Hiscox said. While some cases have been or will be revised down on appeal, there are clear signs the overall trend in "super losses" is rising, Thompson said.

More than half of all the largest medical professional liability claims in history have been paid in the past five years, according to research by Hiscox. Losses greater than $5 million are increasing, growing from around 0.25% of all losses in 2000, to 0.7% currently and are predicted to be 1% by 2014, Hiscox said.

With insurers charging premiums for catastrophic events often based on a one-in-200 or 300-year loss, "It's time that the health care insurance sector took a careful look at its catastrophic exposures," Thompson said.

So far, those massive claims have not meant changes in rates, terms and conditions in the market, he said. Hiscox saw a slight increase in medical professional liability rates in October, the first since 2005, "but no one should get excited," Thompson said. "There are still plenty of decreases in the market."

One thing some medical professional liability companies are doing is suggesting doctors apologize when something goes wrong.

Physicians Liability Insurance Co., the largest medical professional liability writer in Oklahoma, is encouraging its doctors to say they're sorry because apologizing can save the doctor/patient relationship, reduce medical malpractice claims, and is the right thing emotionally — and financially — for the patient, the doctor, and MPL writers, Dr. Carl Hook, chairman and president of PLICO, said (Best's News Service, Jan. 16, 2012).

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Doctors Company Insurance Group was the largest writer of medical professional liability in 2010, with a market share of 8.5%, according to BestLink. Rounding out the top five companies were MLMIC Group, with a 7.3% market share; Berkshire Hathaway Insurance Group, with 6.8%; ProAssurance Group, with 5.4%; and CNA Insurance Cos., with 4.7%.

Hiscox Insurance Co. (Bermuda) currently has a Best's Financial Strength Rating of A (Excellent).

(By Meg Green, senior associate editor, BestWeek: Meg.Green@ambest.com)

Copyright: (c) 2012 A.M. Best Company, Inc.
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