As Losses Climb, Healthcare Insurance Premiums Could Increase

As Losses Climb, Healthcare Insurance Premiums Could Increase

August 27, 2018 Business Insurance and Risk Management, The Beacon Blog 0 Comments

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.

About the Author

Harry Cylinder

Harry Cylinder, CPCU, ARM has spent nearly fifty years in the insurance industry, the majority of the time as a consultant. He has been employed by The Beacon Group of Companies since 2008, specializing in the review and analysis of property and casualty coverage forms. Mr. Cylinder has been reviewing policy forms as they have evolved over the past decades. In 2008 he published an article in the CPCU Journal which was the first description of cyber insurance coverage for a general insurance audience. Since that time he has regularly written on cyber and other topics for The Beacon Companies’ blog.