Recent analysis from the American Medical Association (AMA) confirmed what industry professionals already knew: medical liability insurance premiums have increased after a decade of pricing stability.
The AMA report detailed that between 2010 and 2018 the amount of premiums that increased was always between 12% and 17%; however, that number jumped to 26.5% in 2019 and increased nearly 5% to 31.1% in 2020.
Despite the increase in the year of the pandemic, the entire industry is in agreement that pandemic pricing has yet to fully hit medical liability insurance rates, and something as minute as a short break between COVID-19 variant outbreaks will not have any real long-term effect to ease the rise of liability rates.
It is almost a given that medical liability insurance rates will continue to rise over the next 18 months, as pandemic risk is priced into premiums.
State Status Report
The report from the AMA identified 12 states where the rate increases jumped between nearly 10% (Texas) and as much as nearly 30% (Kentucky). Kentucky and South Carolina were the only states to have average premium rate increases over 20%, with both hovering around 30%.
Georgia, Maryland, Montana, Missouri, Nebraska and Oregon all had increases between 15% and 20%, while Illinois, Michigan, New Hampshire and Texas were all between 9% and 14%. The only other state above 5% was North Carolina at nearly 7%.
Implications of Inflation
As pricing inflation rears its ugly head across the domestic economy, medical liability insurance is no different, as offices should expect to pay more for every $1 million in limits, which may result in more restrictive coverage terms with select policies.
The expected range of inflation with premium rates has not been set yet, and may not be set for another year or two. This could lead to even tighter underwriting guidelines. The combination of the pandemic and inflation have never been experienced together before, so forecasts are all still to be determined. While many industry professionals point at the steep increase of catastrophic liability claims as what set the foundation for the price increases, increased exposure from healthcare facilities combined with inflation could spell severe rate increases for the second half of this decade.
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