OLDWICK, N.J.–(BUSINESS WIRE)–The U.S. Segments of medical professional liability (“MPL”) According to a new report, profitability increased significantly in 2021. AM Bests composite group MPL specialists saw their net income rise by around 30%. This was driven by realized capital gains due to the positive performance of capital markets. AM Best report.
AM Best makes this point in its Bests Market Segment ReportThe report, titled Difficult Environment For U.S. Medical Professional Liability, explains that the segment is still facing a negative outlook due to continued depressed demand, rising losses cost trends, increased frequency of high-severity claims, social inflation, and erosion in tort reform. These issues have led to persistently high underwriting combined ratios and waning reserves redundancies over ten years. AM Best believes that the segment reserve position appears to have stabilized, with 2020’s end reserves. The outlook also includes the fact that many complex claims may not be settled quickly by carriers due to delays and court closings that are related to pandemics. This could further increase claims-related expenses.
After rising 3.1% in 2020, and 4.4% in 2019, direct premiums for AM Bests composite MPL insurers increased 7.5% to $8.4 Billion in 2021. Premium growth was driven by price stability and evolving industry dynamics. The report notes that the premiums paid for hospitals, other medical professionals, and other health-care facilities grew in the five prior years to 2021 while the premiums paid for physicians remained steady. According to David Blades, AM Best associate director, industry analysis and research, the segment’s core client base has declined over recent years due to hospital consolidations and physician group, as well as the hospitals employment of doctors. Many hospitals today have their own captives, or self-insurance.
The MPL segments net investment revenue declined by 11% in 2021. This was partially offset by strong realized capital gain and a reduction of underwriting losses. Despite slight improvements in underwriting results and an increase in net income to $932 million the MPL composite suffered a seventh consecutive year of underwriting losses and a combined ratio 110.1 for 2021.
Sharon Marks, AM Best director, stated that operating and underwriting results will likely remain in pressure through 2022 despite important rate actions increasing top-line premium revenues. AM Best believes that underwriting and operating results will continue to be difficult through the remainder 2022, despite important rate actions increasing top-line premium revenues. The combination of persistent inflation and rising interest rates will likely limit any improvement in underwriting results.
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AM Best will host a briefing on May 5, 2022 at 11:00 (EDT) featuring market executives and AM Best analysts. Register for the complimentary event at www. http://www.ambest.com/conferences/MPL22/index.html.
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