How Medical Liability Insurance is Changing

The elderly population is booming, set to double in size by 2050.1 As this increase occurs so will the number of facilities needing Allied Medical policies, including: medical clinics, hospice care, healthcare staffing, and adult day care facilities. Currently, premiums written in the property and casualty industry for Allied Lines equates to more than $9.1 billion, and Medical Malpractice premium nets $8.2 billion in North America.2

In describing the Medical Liability insurance market, Karl Olson, Vice President, Professional and Management Liability, Burns & Wilcox Brokerage, says “The standard Medical Malpractice marketplace for physicians and hospitals continues to be profitable to the carrier, maintaining a soft market. However, changes in Allied Medical are occurring as more states allow non-physicians, physician assistants, or nurses to broaden the scope of services they provide without direct physician oversight.”

As these changes become more pronounced, more information is needed by underwriters to draft the submission. Chris Stephens, Senior Underwriter, Professional Liability Centre of Excellence, Burns & Wilcox Canada, adds “The Canadian market has been relatively stable, with an increasing carrier appetite that is actually broadening the scope of policies the markets are willing to write.”

The rise of adult day care facilities

The rise of adult day care facilities has created an additional target class in Allied Medical insurance.

“Individuals are searching for ways to make elder care more economical and adult day care is one such avenue. These facilities, and in-home health options, are generally less expensive than placing a loved one in a skilled nursing facility or hospital,” says Olson.

In a heart wrenching story from CNN, it was reported that the United States government has reprimanded more than 1,000 nursing homes for mishandling or failing to prevent sexual molestation cases, with more than 16,000 complaints of this abuse in nursing homes since 2000.1

“Facilities can purchase additional coverage on an Allied Health policy to cover for unfortunate instances such as this,” says Olson. “However, previous cases will need to have proof of remediation and future prevention techniques for the underwriting process.”

Other specialty areas

Brokers and agents have a unique opportunity to capitalize on growing trends of healing and wellness.

Stephens says, “Business owners who are involved in fields such as bio-magnetic therapy, hypnotherapy, spa and wellness, acupuncture, and weight loss practitioners sometimes have difficulty being insured by standard carriers. This is where brokers can turn to their trusted specialty insurance partner for advice.”

Policies for these non-standard businesses require added expertise to avoid gaps in coverage. Stephens explains that he combines three separate coverages together on one policy, including Commercial General Liability, Medical Malpractice, and Errors & Omissions.

“Sometimes there can be grey areas, and it helps to package the three coverages together to prevent improper coverage – they are very inclusive,” said Stephens. “Combining coverages also gives the market writing it more control over the claims process so there is no confusion.”

Reviewing coverage with clients

“If a client has been with the same carrier for years, there is a good chance that other carriers can provide improvements as downward pricing pressure is prevalent,” said Olson. “Overall, coverage terms have the potential to be improved and coordinated, limit structures have transformed, broader coverage should be brokered, and risk management services can be taken advantage of.”

For example, in the Allied Health market, one nurses staffing firm had recently changed from a carrier they were using for the last five years. After their broker went to their wholesale partner to shop the specialty markets, pricing was decreased by 20 percent for the same coverage. Additionally, they were able to take advantage of higher limits, more coverage, and superior terms.

“For situations where the primary policy will not move, there is an opportunity for brokers and agents to place the Excess or Umbrella policy for higher limits,” said Olson.

Numerous standard carriers have been making a vast array of underwriting changes in the Medical Liability space. Olson stated that “While appetite is changing and staffing is contracting a bit, some standard carriers may be looking to gain more premium at the renewal stage. Clients with past claims are being looked at much more critically than even just a year ago.”

Allied Health and Medical Malpractice are two very large segments of the property and casualty industry. For brokers and agents to learn these coverages more in-depth, partnering with a wholesale expert can speed the education process. The need for this insurance is increasing daily, and to properly increase a commercial book of business, Medical Liability needs to be a core component.

References:

  1. CNN
  2. Insurance Information Institute