The malpractice squeeze: How to protect your practice in a hard market

Just a few years ago, a $25 million malpractice award would have qualified as a nuclear verdict. Today, some experts say that threshold is edging closer to $50 million. As claim severity grows, carriers are raising premiums, cutting capacity, and tightening underwriting, reshaping the malpractice insurance landscape in the process.

Physician and hospital groups are feeling the impact. On one side, premiums are climbing, and insurers are becoming more selective. On the other, proposed federal changes to Medicaid reimbursement could further tighten margins and disrupt practice revenue.

Now is the time for practices to get their financial house in order and take a hard look at where revenue comes from, and where it may be disrupted. Will you continue to treat Medicaid patients? Can your practice absorb tighter margins while insurance costs rise?

In the past, some physicians managed those pressures by shopping their coverage annually and hoping the bidding process would yield savings. But that strategy is less effective today. With many carriers operating at a loss, the market has become more selective, and mass-marketing your coverage annually can backfire, especially if you’ve had prior claims or fall into a higher-risk specialty.

Best practices for navigating a hardening malpractice market

Rising costs don’t have to mean greater risk. But before physicians can take steps to protect themselves, it’s important to understand how medical professional liability (MPL) premiums are determined.

Rates are driven by three primary factors: the type of medicine practiced, the location of the practice, and the provider’s historical loss performance. While other factors do come into play, these are the rudimentary basics on which the rating process starts.

High-risk specialties like OB-GYN, emergency medicine, and neurosurgery typically command higher premiums due to the frequency and severity of claims. Jurisdictions like Cook County, Ill., see elevated rates due to litigation trends and high jury awards. And loss history, including closed and dismissed claims, remains critical to underwriting consideration.

With these fundamentals in place, the following best practices can help medical professionals strengthen their risk profile and navigate today’s challenging insurance market.

1. Strengthen risk management and clinical discipline. High-quality care remains the most effective long-term strategy for mitigating malpractice exposure. Implement clinical checklists, adhere to standardized protocols, and maintain thorough documentation. Medical records are critical: clear, detailed documentation of care provided is often the best defense when a claim arises.
2. Evaluate the scope of services offered. Some lines of service carry more exposure than others. Obstetrics, for example, has become prohibitively expensive to insure in many regions, leading some hospitals to close their OB units. Evaluating what services are offered and how those services align with risk tolerance and insurance market realities is an increasingly necessary part of operational planning.
3. Take an enterprise-wide view of risk. MPL risk isn’t limited to clinical performance. Everything from front-desk scheduling to the tone of follow-up calls can influence patient satisfaction, and ultimately, the likelihood of litigation. Practices should regularly review documentation workflows, staff communication protocols, and operational consistency across the care continuum. Even logistical issues — like a patient waiting over an hour past their scheduled appointment — can erode trust. Patients who feel heard and respected are less likely to sue, even in the face of adverse outcomes.
4. Use data to drive improvements. Loss runs and claims history offer valuable insights. Practices should become comfortable reviewing this data and asking difficult questions: What caused these claims? Were there missed steps, communication gaps, or process failures? Insurers increasingly expect applicants to demonstrate that they’ve analyzed and acted on past incidents.
5. Prioritize clinical staffing and team-based care. Research consistently links well-staffed, experienced teams to better outcomes and fewer claims. Supporting nurses, PAs, CRNAs, and other allied professionals through appropriate staffing levels, training, and retention efforts leads to stronger continuity of care, fewer errors, and improved patient satisfaction.
6. Engage with brokers beyond renewal season. MPL insurance should never be a once-a-year conversation. The best time to engage with brokers, risk consultants, and claims advisors is two months after renewal, when the pressure of decision-making has passed. These discussions can uncover new risk mitigation opportunities, explore alternative coverage structures, and help ensure the current insurance program still fits the organization’s evolving profile. Coverage decisions made in haste — or without context — often prove costly over time.

Insurance is a stability tool — use it that way

In a hardening market, MPL insurance plays a stabilizing role — but only if it’s chosen thoughtfully. The goal isn’t just lower premiums, but ensuring the practice can continue operating, serving patients, and withstanding financial volatility. That requires coverage that’s financially sound, appropriately structured, and aligned with today’s elevated risk environment.

As practices prepare for potential shifts in Medicaid reimbursement under the proposed “Big Beautiful Bill,” protecting the revenue is only half the equation. The other half is ensuring the MPL coverage in place is strong enough to support the practice through uncertainty.

Pete Reilly is North American Healthcare Practice Leader & Chief Sales Officer at HUB International. He has been a featured speaker at numerous professional conferences, including ASHRM, the Bermuda Captive Conference as well as having been a guest lecturer on topics of insurance and risk management at The Wharton School, a Metzger-Conway Fellow at his alma mater, Dickinson College, and he has been twice recognized as Med Pro Group’s Buffett Award winner. Additionally, Pete has served on numerous insurance carrier Agency Advisory Councils and various ASHRM National Advisory Committees.

He holds a Bachelor’s degree in Political Science from Dickinson College, a Master of Science in Organizational Dynamics from the University of Pennsylvania, as well as an Associates in Claims and Associate in Risk Management designation from The Insurance Institute of America.