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Survey Report

Insurance Marketplace Realities 2022 – Healthcare professional liability

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November 15, 2021

Healthcare professional liability rate increases continue to decelerate, and terms and conditions are stabilizing as well.

Rate predictions

Rate predictions: Health care professional and general liability
  Trend Range
Primary Increase (Purple triangle pointing up) +5% to +25%
Excess Increase (Purple triangle pointing up) +15%
Hospital Increase (Purple triangle pointing up) +5% to +25%
Allied health Increase (Purple triangle pointing up) +5% to +15%
Physicians Increase (Purple triangle pointing up) +5% to +15% (particularly venue dependent)
Loss affected accounts Highly variable rate increases

Key takeaway

Healthcare professional liability rate increases continue to decelerate, and terms and conditions are stabilizing as well.

The trend toward stabilization may be largely driven by the impact of new entrants; interestingly, however, the new capacity that entered the market in the first half of 2021 did little to offset the capacity gaps created by market exits and the resulting reduction in deployed limits.

  • This capacity deficit may create a bifurcated market, wherein larger towers of capacity are subject to slightly more rate pressure and restricted terms and conditions.
  • Additionally, continued underwriting discipline will mute, though not eliminate, the competitive impact of the new capacity.

Overall hospital and allied health marketplace

  • Rate deceleration is expected to continue into 2022; we may start seeing a reemergence of flat renewals for lower hazard risks with good loss experience.
  • Capacity, although substantially reduced since Q1 2020, has started to rise with the entrance of several new carriers. However, the reduction in deployed capacity from $25 million per risk to $10 – $15 million per risk is starting to feel permanent.
  • We are seeing markets using ventilation strategies when deploying over $5 – $10 million in capacity on a program — splitting their capacity into two layers.
  • Terms and conditions are starting to stabilize; markets have largely addressed COVID-related exposures and silent cyber exclusions. While sexual abuse and molestation exclusions and batch language provisions are percolating concerns, markets address these issues on an account-by-account basis.
  • Self-insured retentions and deductibles (per claim and in the aggregate) continue to increase in most healthcare segments, with many clients exploring increased use of captives and other self-insurance mechanisms.
  • New insurers entered the market with limited excess offerings for 7/1. Having worked on form and product development over the summer, many offered a broader suite of products (with some primary offerings) as of 10/1. This expansion of appetite and capability will increase competition in the market and positively impact rates and coverage into 2022.

Physician’s professional liability market

  • Against a backdrop of industry combined ratios over 115, declining investment income and continued increases in claim severity, rate increases continue to be modest (+5% to +15%), although larger accounts may experience much greater increases due to loss history, specialty mix and venue.
  • Substantial provider M&A activity continues and has the potential to impact insurance program pricing and structures.
  • The negative impact of physician carrier consolidation has been mitigated by continued geographic expansion of many insurers’ appetites.
  • There is a great deal of uncertainty about increased use of telemedicine, which saw a huge spike driven by the pandemic, as a potential area of litigation.
  • Blanket COVID-19 exclusions are not yet commonplace for most carriers.

Healthcare organizations should be sure to consider several key risk issues in 2022.

  • Workplace violence: Traditional security measures are no longer sufficient to counter the emerging risks of violence and threats to the safety of patients, visitors and employees regardless of healthcare setting. Healthcare risk managers should develop and implement policies and procedures that address clinical and administrative settings.
  • Workforce retention and mental health: In the pandemic, healthcare workers have experienced psychological distress as severe as in war time. Resignations are at an all-time high. Healthcare risk managers need to understand the signs and symptoms of burnout, assist in pointing healthcare professional to helpful resources, acknowledge their own stressors and proactively work toward organizational pandemic preparedness.
  • Artificial/augmented intelligence (AI) and clinical decision making: AI is moving beyond predictive analytics and rapidly moving toward real time clinical decision making. Healthcare risk managers need to understand where, when and how AI is being used within their organizations, be familiar with policy, procedure and documentation related to the AI contributions to each medical specialty, and get ready to address the potential risk exposures.

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. 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 advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed subsidiaries of Willis North America Inc., including Willis Towers Watson Northeast Inc. (in the United States) and Willis Canada, Inc.

Contacts

Head of Healthcare Broking, North America,
Willis Towers Watson

National Physician Center of Excellence Leader

DNP, APN-BC, CPHRM
Leader, Clinical and Enterprise Risk Management
National Healthcare Industry Practice

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