As Losses Climb, Healthcare Insurance Premiums Could Increase
According to a recent study by Ironshore, a Liberty Mutual company, the severity of hospital professional liability claims has been increasing even as frequency has stayed flat or decreased. Claims over $5 million are increasing by 10% annually, claims over $10 million by 7%. Insurers’ allocated loss expense ratios have increased by 2.9 points from 2006 to 2012.
According to Lainie R. Dorneker, president of IronHealth, changes in the healthcare sector are driving these increases. Consolidation of hospital systems through acquisitions and strategic partnerships creates larger organizations and greater exposures to loss. Advanced medical technologies can lead to more complicated claims and higher awards.
We can expect that these trends will not only impact hospital professional liability, but healthcare directors and officers liability and cyber liability.
With catastrophic losses from hurricanes and wild fires, the insurance industry cannot sustain higher losses in healthcare without a premium increase. The question is, how soon and how much.