Health Care Systems Are Expected to See Stable Claim Frequency, But New Challenges Are on the Horizon

CHICAGO, Oct. 17 -- Aon, a provider of risk management, insurance and reinsurance brokerage, human resources solutions and outsourcing services, issued the following news release:

Nationwide, health care systems are expected to experience stable frequency of self-insured professional liability claims, according to the Aon/ASHRM Hospital and Physician Professional Liability Benchmark report. A deeper analysis into large claims shows early signs that health care systems could see an increase in claim frequency for claims greater than $5 million. The 2017 report was released today by Aon plc (NYSE: AON), a global professional services firm, in conjunction with the American Society for Healthcare Risk Management.

"For the last few years, health care systems have seen a relatively stable trend of typical professional liability claims. This raised the question regarding trends in extremely large claims, and we see early signs of a claim frequency increase in this area," said Virginia Jones, FCAS, MAAA, Senior Consultant & Actuary of Aon Global Risk Consulting. "These early signs can assist health care systems and their risk management departments in proactively managing the potential for large claims."

The 2017 study also included insight from XL Catlin, finding evidence that batch claims, or a group of related incidents, are on the rise in nearly every state - with a focus on sterilization issues and employee misconduct claims. In some cases, these related events may take years to manifest, adding further complexity to containing these risks. Despite the vigilance of health care systems through robust risk mitigation efforts, the variable elements and dynamic daily operations of any system may make it difficult to eliminate the risk of a batch entirely.

This year's Aon/ASHRM report found several other challenges that hospitals and health care systems are facing, including:

* Patient Satisfaction: Similar to previous years, higher patient satisfaction scores, which indicate better overall impressions of the patient experience, are linked to lower claim frequency results. Further exploration into more specific aspects of patient satisfaction indicate that the quietness of the hospital environment and the quality of communication are key elements of the patient experience and are significantly correlated to claim frequency.

* Vicarious Liability Exposures: Health care providers are becoming increasingly concerned with potential vicarious liability exposures presented by non-employed physicians working within the hospital inpatient and outpatient facilities, as some health care systems can become liable for the negligent actions of a third party provider. This concern is especially prevalent within emergency departments where the use of independent contractors is common.

* Cyber Risk: The changing environment and increased use of technology within the health care field makes cyber risk one of the top concerns for health care risk managers, according to Aon's 2017 Global Risk Management Survey. While almost all of the Aon/ASHRM report survey respondents indicated that they purchase cyber insurance, 22 percent rely on an established captive to support their cyber insurance coverage.

Other Noteworthy statistics from the 2017 Aon/ASHRM Hospital Professional Liability Benchmark report:

* Projected loss rate for hospital professional liability is $2,750 per occupied bed equivalent for events occurring in 2018. The frequency of claims is projected to be $1.61 per 100 OBE and the severity of claims is expected to be $171,000 per claim.

* Projected loss rate for obstetrics claims occurring in 2018 is $172.00 per birth and emergency department is $5.78 per visit.

* Projected loss rate for physician professional liability is $5,710 per class 1 (internal medicine) physician for events occurring in 2018. The frequency of claims is projected to be 3.50 per 100 class 1 physicians and the severity of these claims is expected to be $163,000 per claim.

* Projected loss rate for hospital general liability is $130 per OBE; the average general liability claim is expected to be $42,000 for claims occurring in 2018.

* Labor and Delivery (L&D) Related Issues, with an average value over $350,000, continue to be significantly more severe than claims related to other allegations. The most costly L&D related issue was Delay in Delivery with an average cost over $1.1 million.

* Projected Hospital professional liability and PPL loss rates are increasing at a 2 percent annual rate

* Frequency, severity, and loss rate statistics were separately analyzed for twenty-five individual states, including breakouts by territory for Florida, Illinois, and Pennsylvania.

Click here (https://ams.aha.org/EWEB/?ahabu=ASHRM&Action=Add&ObjectKeyFrom=1A83491A-9853-4C87-86A4-F7D95601C2E2&WebCode=ProdDetailAdd&DoNotSave=yes&ParentObject=CentralizedOrderEntry&ParentDataObject=Invoice%20Detail&ivd_formkey=69202792-63d7-4ba2-bf4e-a0da41270555&ivd_prc_prd_key=2697626f-760d-4a63-8104-cb085216780b) to purchase a copy of the 2017 Aon/ASHRM Hospital and Physician Professional Liability Benchmark report.

About the 2017 Aon/ASHRM Hospital and Physician Professional Liability Benchmark report

The database includes 119 U.S. health care systems, representing 33.5 percent of the total U.S. hospital industry. Data collected includes 107,610 non-zero professional liability claims, representing more than $19.2 billion of incurred losses. The database contains historical claim information for 10 accident years (2007 to 2016). All ASHRM members were invited to participate in the study, which is designed as a hands-on tool to provide health care risk managers with a better understanding of their cost of risk compared to an industry benchmark. Through measurement and analysis of claim and exposure data, risk managers can develop proactive strategies to help reduce risk-related costs and improve related outcomes.

About Aon

Aon plc (NYSE:AON) is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance. For further information on our capabilities

and to learn how we empower results for clients, please visit http://aon.mediaroom.com.

About the American Society for Healthcare Risk Management (ASHRM)

The American Society for Healthcare Risk Management (ASHRM) is a professional membership group of the American Hospital Association (AHA) representing enterprise risk management, clinical, insurance, legal, patient safety and other related interests.

ASHRM promotes effective and innovative risk management strategies and professional leadership through education, advocacy, publications, networking and interactions with leading healthcare organizations and government agencies. ASHRM initiatives focus on developing and implementing safe and effective patient care practices, the preservation of financial resources and the maintenance of safe working environments.

About XL Catlin

XL Catlin is the global brand used by XL Group Ltd (NYSE:XL) insurance and reinsurance companies which provide property, casualty, professional and specialty products to industrial, commercial and professional firms, insurance companies and other enterprises throughout the world. Clients look to XL Catlin for answers to their most complex risks and to help move their world forward. XL Catlin provides health care products through its underwriting teams in Bermuda and London. To learn more, visit www.xlcatlin.com.

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