Medical liability premiums increasing

An American Medical Association analysis has found that medical liability premiums have surged over the past three years. The prevalence of increases between 2019 and 2021 has not been seen in almost 20 years.

The analysis showed that the share of medical liability premiums with year-to-year increases was somewhat stable between 2010 and 2018. The recent period of upward volatility began in 2019 when the proportion of premiums that increased was about 27%, almost double the rate from 2018. In 2020 and again in 2021, roughly 30% of premiums increased.

“The medical liability insurance cycle is in a period of increasing premiums, compounding the economic woes for medical practices that struggled during the past two years of the pandemic,” said AMA President Gerald E. Harmon, M.D., in a statement. “The increase in premiums can force physicians to close their practices or drop vital services. This is detrimental to patients as higher medical costs can lead to reduced access to care.”

Twelve states reported double-digit premium increases in 2021. Illinois led all states with the largest proportion (58.9%) of premiums that increased 10% or more, followed by West Virginia (41.7%), Missouri (29.6%), Oregon (20%), South Carolina (16.7%), Idaho (11.1%), Kentucky (7.4%), Delaware (6.7%), Washington (6.7%), Michigan (5.4%) Texas (4.9%), and Georgia (3.7%). The size of the largest premium increase in these states ranged from 35.3% in Illinois to 10% in Idaho and Washington.

“Insurers started raising premiums in response to deteriorating underwriting results, lower loss reserve margins, and lower returns on investment,” according to actuaries cited by the AMA analysis. Thus, actuaries “expected that insurers would sustain or even push for higher premiums in 2021.”

The analysis also found major differences in premiums by location. For example, in 2021 some obstetricians and gynecologists faced base premiums ranging from $49,804 in Los Angeles County, California, to $215,649 in Miami-Dade County, Florida.

The surge in increasing premiums largely coincided with the pandemic, but the analysis noted that the long-term effects of the pandemic are still unknown and it appears base premiums have not been affected for now.