Inflation — both economic and social — has added an estimated $4 billion in insured losses and expenses to the U.S. medical malpractice insurance market over the past decade, according to a new study commissioned by The Doctors Company and conducted by Moore Actuarial Consulting.
The 2025 report builds on findings from a similar 2023 analysis, confirming that rising costs and larger verdicts continue to reshape the medical professional liability landscape. Inflationary pressures are now responsible for roughly 11% of all booked losses for physician-focused insurers in the decade ending in 2024 — a $1.6 billion increase over the prior estimate for the decade ending in 2021.
“Physicians are facing rising premiums driven by both economic pressures and the continued increase in large settlements,” said Robert E. White Jr., president of TDC Group. “We will continue to research and raise awareness of this concerning trend that affects physicians and patients.”
Evidence of social inflation
The study attributes much of the continued cost escalation to social inflation, defined as claim costs that grow faster than the overall economic inflation rate. While economic inflation spiked to a 40-year high in 2022, social inflation has persisted independently, driven by changes in litigation dynamics and jury behavior.
Analysis of the National Practitioner Data Bank (NPDB) confirms that the share of malpractice claims exceeding $2 million has increased more than tenfold since 1990. Even after adjusting for medical inflation, the proportion of claims above $2 million rose 67% between 2013 and 2023.
The average payment per report reached $458,000 in 2023, the highest level in nearly two decades, as complex cases resumed after pandemic-related court slowdowns.
Nuclear verdicts and emerging drivers
Large jury awards continue to rise sharply. The average of the top 50 medical malpractice verdicts increased from $32 million in 2022 to $48 million in 2023 and $56 million in 2024, according to the study.
In addition, third-party litigation financing — in which investors fund lawsuits in exchange for a portion of settlements — has become an emerging factor. Actuarial estimates project that the practice could cost insurers between $13 billion and $25 billion over the next five years.
Impact on the market
Actuarial data show that malpractice insurers experienced underwriting losses averaging –10% of direct premiums earned in 2023, up from –8.2% in 2021. Rates have been rising since 2019, with nearly half of surveyed physicians reporting premium increases in 2024.
The 2025 study concludes that inflation continues to drive higher claim costs, increasing rates and potential coverage reductions. Researchers warn that without continued attention, the trend could further strain insurers and limit physician access to affordable coverage.
