State of the Insurance Market Report

Coverage Considerations

Current trends are expected to persist with all available data indicating the market will continue to harden. The brief respite in claims during the pandemic is over, and we have seen claims frequency and severity resume where they left off. We anticipate incremental premium increases to continue for the foreseeable future to offset the risks of nuclear verdicts. Additionally, some carriers are seeking increases in self-insured retentions, and many are cutting back on capacity. This, in addition to rate increases, is becoming commonplace for many renewals.

• Professional Liability: While the number of claims has bounced back to pre-COVID-19 numbers and remains stable compared to pre-pandemic numbers, the payout for claims continues to rise. Medical malpractice payouts increase as more nuclear verdicts (+$10M), and thermonuclear verdicts (+$25M) are reached. This is driven primarily by premature births, congenital anomalies, and cancer care. This trend is expected to continue and accelerate, leaving insurance carriers vulnerable to significant losses. If this risk grows, it may change underwriting and make acquiring coverage more difficult.

  As nurse practitioners and physician assistants become more prominent in healthcare, medical malpractice markets seek more appropriate pricing that better aligns with the adapting roles, as we’ve seen in 2024, with significant rate increases for these policies. Similarly, we see an increase in per diem nursing and 1099 contract employees and recommend carefully considering these employees’ coverage options.

• Property: Healthcare organizations face continued pressure to increase property values due to inflationary pressures, though the percentage increases required by carriers have started to moderate. Hiring an outside appraiser ensures an unbiased property valuation compared to an insurer's assessment. Capacity is limited for catastrophic exposures and risks with a large concentration of frame construction. Carriers continue to seek higher deductibles, especially for wind/hail, due to increased convective storm activity. Organizations may need to layer policies from multiple insurers to secure sufficient coverage.
• Cyber: Rate increases have recently stabilized, but the Change Healthcare and CrowdStrike incidents could impact future rate increases. For organizations that experience a ransomware incident, whether directly or via a third-party service provider, we recommend notifying insurance carriers of a potential circumstance and looking to policies — primarily cyber, but also directors and officers (D&O) and professional liability — for possible coverage. We also recommend seeking outside counsel to ensure compliance with HHS guidelines.
• Workers’ Compensation: Workplace shootings and violent attacks continue to be a concern for healthcare organizations. Healthcare workers are five times more likely to sustain workplace violence injuries than employees in other fields. Healthcare workers are in harm's way and, most importantly, workers' compensation policies often have exclusions for injuries suffered through deliberate acts of violence. An incident with an agitated patient coming out of anesthesia may be covered under a workers’ compensation policy. However, a disgruntled patient returning to the clinic armed may not be, leaving additional exposures both financially and for support for the affected parties.
• Auto: Many carriers are reluctant to offer stand-alone auto coverage for healthcare risks. Most auto carriers will only consider writing coverage with a supporting line of business. There continues to be a minimal appetite for ambulance/patient transport risks in the marketplace.