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Survey Report

Insurance Marketplace Realities 2020 Spring update – Managed care errors and omissions

N/A
COVID 19 Coronavirus

May 7, 2020

To cope with a highly volatile marketplace, the renewal process must begin early; high-quality submissions are essential.
Rate predictions
  Trend Range
Overall Firming to hard and changing rapidly
Blue plans Increase (Purple triangle pointing up) +30% to +50% or more
Public managed care organizations Increase (Purple triangle pointing up) +10% or more
All other managed care organizations Neutral increase (Flat yellow line with Purple triangle pointing up) Flat to +10%

Key takeaway

To cope with a highly volatile marketplace, the renewal process must begin early; high-quality submissions are essential.

The managed care E&O market is hardening as insurers strive for profitability.

  • Carriers continue to increase rates and segment their business between Blue plans and non-Blue plans.
  • Some carriers are strictly managing capacity and exposure between public and non-public business entities.
  • One major market’s exit last September created a reduction in capacity.
  • Other carriers continue to manage capacity by reducing limits they are willing to write across their portfolios.
  • No new domestic or offshore capacity has entered the market. Bermuda and London are high excess markets only. Domestic carriers and their offshore counterparts are managing capacity more closely.
  • The shrinking market is leading to less favorable terms and conditions.
  • Clients can help themselves obtain the best possible terms by hosting carrier renewal meetings and providing submission materials well in advance of the renewal date. These materials should include complete claim information, membership breakdown by type of member and a complete list of managed care core and non-core services.

Insurers are concerned with systemic risk.

  • Systemic risk plagues managed care organizations, and managed care E&O carriers are assessing their entire portfolios as they manage their capacity and risk.
  • Antitrust class action litigation is a leading challenge for the industry. Carriers are managing this exposure via coverage limitations and sublimits. Although driven by the Blue plan Multi-District Litigation, other class action litigation and competitor and network litigation is a concern for all plans.
  • Some carriers are pulling back antitrust coverage and reducing antitrust limits, increasing retentions, applying coinsurance and adding exclusions for risks such as those related to association relationships. Where associations govern business practices or competition between association members (versus just serving as a marketing/lobbying group), there is a substantial likelihood of litigation or regulatory review.
  • Opioid class action litigation brought by governments (or putative classes) are driving carriers to add broad opioid or controlled substance exclusions across their entire health care portfolios. This has been manageable, to date, as some carriers place these restrictions/exclusions on PBM and life sciences operations and not on the traditional payor or health plan operations.

Cyber coverage offered in managed care E&O policies is constantly evolving.

  • Some carriers continue to add broad cyber exclusions for third-party losses (first-party coverage is not provided except for very small managed care entities).
  • There is sufficiently broad coverage for all managed care entities in the cyber marketplace and it is still reasonably priced — meaning that the reductions in coverage in the E&O forms are not impactful.
  • Carriers that continue to offer third-party privacy liability in their policy forms are beginning to exclude hacking and intentional acts of employees.

Disclaimer

Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates. COVID-19 is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information.

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