For more than a decade, medical malpractice insurance rates fell year after year from 2006 to 2018 and then remained flat for a historic length of time. Prior to that “Soft Market,” physicians had a difficult time finding insurance that they could afford. The medical malpractice insurance market is cyclical and will continue to fluctuate based on many factors.
The factors that influence the fluctuations in medical malpractice insurance rates are variables out of anyone’s control. Interest rates, return on investments for insurance carriers, frequency of malpractice claims, the severity of malpractice claims, competition, social pressures, litigious environments, and changing healthcare practices are the main drivers in ebbs and flows in premiums. All these factors influence the medical malpractice insurance carriers’ profits and losses, which help determine the rates.
Going back as far as 2000, the medical malpractice insurance market was in crisis mode. Most practicing physicians were in private practice or worked for a private group, and they were buying their own insurance coverage. As insurance carriers exited the market or tightened underwriting guidelines, or stopped taking new business, physicians and groups had a hard time finding insurance at all, let alone insurance they could afford. This crisis drove many physicians out of practice. Some went to hospital employment, and some left in search of new careers. Many physicians moved across state lines to find affordable options. This “Hard Market” continued through 2005.
What helped turn things around? Anyone practicing medicine at that time will tell you, they were looking for alternative insurance products or programs to help them stay in practice. Around 2003 – 2004, alternative options emerged. Physician-owned insurance carriers, mutual companies, RRGs, and assessable companies stepped into the market and shook up everything. Suddenly the large, national stock carriers were not the only options.
New options in the medical malpractice insurance (also known as Medical Professional Liability Insurance) market meant more competition, and gradually insurance rates declined throughout the next few years landing at all-time lows in a historic soft market. Physicians enjoyed lower rates at each insurance policy renewal. But, as expected, with a business that is cyclical, it didn’t last forever. In the second half of 2018, signs of a hardening market appeared in the form of small rate increases in states where malpractice claim severity was high and insurance carrier profits were low and declining. It was a slow, gradual turn that would bring us to our current situation: Medical malpractice insurance rates are on the rise and will continue that trend for the next few years.
From 2019 to 2022, medical malpractice insurance carriers increased rates in most states from 5% – 15% based on loss ratios in those areas. The beginning of 2023 has already shown consistent increases, though smaller so far. Experts remain confident that the medical malpractice insurance market is cyclical, and rates will continue to rise. To learn more, or to find out how to get the lowest medical malpractice insurance rates in your specialty and state, contact eQuoteMD today.