OLDWICK, N.J. May 4, 2022–(BUSINESS WIRE)–The U.S. medical professional liability (MPL) segments profitability improved considerably in 2021, with the net income of AM Bests composite group of MPL specialists rising by approximately 30%, driven by realized capital gains owing to the favorable performance of the capital markets, according to a new AM Best report.
AM Best however, notes in its Bests Market Segment Report“Difficult Environment of U.S. Medical Professional Liability” states that it still has a negative market segment outlook. This is due to the continued depressed demand, rising loss costs, increasing frequency of high severity claims, inflation, and erosion of tort reform. These issues have led to persistently high underwriting combined ratios and waning reserves redundancies over ten years. AM Best believes the segment’s reserve position is now stable with the 2020 calendar-year-end reserves. This outlook also includes the fact that many complex claims may not be settled quickly by carriers due to delays and court closings related to pandemics, which could lead to higher 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. This premium growth was largely due to price stabilization and changing industry dynamics. The report finds that premiums for hospitals and other health-care professionals grew in the five years before 2021, while those for doctors decreased steadily. David Blades, AM Best associate director, industry analysis and research, stated that “the segments core client base has declined in recent years due to physician group and hospital consolidations, as well as the hospitals employment of doctors.” “Today many hospitals have their own captives, or self-insurance schemes.”
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 a slight improvement of underwriting results and the net income rise to $932million, the MPL Composite experienced a seventh-straight consecutive year of underwriting loss and a combined ratio (10.1) for 2021.
Sharon Marks, director at AM Best, stated that “AM Best believes that operating and underwriting results will remain pressured through 2022, despite important rate actions improving top line premium revenue.” “AM Best believes that operating and underwriting results will continue to be challenged through the remainder (2022), despite much-needed rate action improvements improving top-line premium revenues. Depressed physician demand, worsening claims severity and significant available capacity in this segment of the market, combined with persistent inflation and rising rates, will likely limit any improvement in underwriting results.
Please visit this link to access the complete market segment report. http://www3.ambest.com/bestweek/purchase.asp?record_code=319635.
AM Best will host an analysis briefing on the state and future prospects of the MPL insurance industry on May 5, 2022 at 11:00 AM (EDT). It will feature leading market executives as well as AM Best analysts. Register for the complimentary event at www. http://www.ambest.com/conferences/MPL22/index.html.
AM Best is a global credit agency, news publisher, and data analytics provider that specializes in the insurance industry. The company’s headquarters is in the United States. It has regional offices located in London, Amsterdam and Dubai. Visit www.seaport.com for more information www.ambest.com.
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Contacts
David Blades
Associate Director, Industry
Analytics and Research
+1 908 439 2200, ext. 5422
[email protected]
Sharon Marks
Director
+1 908 439 2200, ext. 5477
[email protected]
Christopher Sharkey
Public Relations Manager
+1 908 439 2200, ext. 5159
[email protected]
Jeff Mango
Management Director,
Strategy & Communications
+1 908 439 2200, ext. 5204
[email protected]
