New study examines professional liability insurance

Insurers in the medical professional liability insurance markets were recently informed of the need to adapt to new health care reforms in order to stay profitable.

One new research study was recently published by Conning Research that detailed the changing face of the medical professional indemnity insurance markets.  The study found that professional liability insurance in the medical field has a highly cyclical nature.

One example of this is how the casualty and property segment of medical business insurance has made remarkable returns to profitability over the last decade.  However over the last two years rates have been seen to decline, which led to lower reported premiums as well.

Conning noted that these cycles in the business liability insurance markets are constant.  However the reasons behind the cyclical nature of the markets do fluctuate.  Tort reform measures, aggressive claims defense, and better risk management strategies were the primary drivers behind recent profitable years, the firm added.

The financial condition of hospitals, tort reform rollback, and some aspects of health reform will challenge profitability during the new cycle.

Conning commented further on the impacts of tort reform.  The firm stated that the benefits of damage caps not tied to economics are well proven,  however many regions are reversing reform measures.  This reversal may be of concern to insurers.

Even subtle changes to case law can have far-reaching consequences to regional loss costs, Conning said.

Conning also added that medical professional liability insurers may have their loss profile affected in the near future.  This could be the result of health care reforms that aim to make care affordable and available for more people. Conning stated that shortages to the number of physicians may be one result of the reforms.

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