U.S. professional indemnity insurance environment remains challenging despite some improvement in 2021


OLDWICK, NJ, May 04, 2022–(BUSINESS WIRE)–Profitability in the U.S. Medical Professional Liability (MPL) segment improved significantly in 2021, with AM Best’s Composite MPL Specialist Group net income increasing by approximately 30%, driven by capital gains realized on the favorable performance of capital markets, according to a new AM Best report.

However, AM Best notes in its Best Market Segment Report, titled “Tough Environment for Medical Malpractice in the United States,” that it still maintains a negative market segment outlook on the segment, given significant challenges to profitability from continued depressed demand, trends to rising loss costs driven by increased frequency of high-severity claims, social inflation, and erosion of tort reform. These challenges have resulted in persistently high combined underwriting ratios and reduced reserve layoffs over the past decade. However, AM Best believes that the segment’s reserves position now appears to have stabilized with end-of-calendar-year 2020 reserves. court closures and pandemic-related delays, which could further increase claims-related expenses.

Direct written premiums for AM Best’s composite of MPL insurers increased 7.5% in 2021 to $8.4 billion, after increasing 3.1% in 2020 and 4.4% in 2019. Firming prices, along with changing industry dynamics, have been a major driver of this premium growth. The report notes that in the five years to 2021, premiums for hospitals, other healthcare professionals and other healthcare facilities have increased, while those for physicians have steadily declined. “The segment’s core customer base has declined in recent years due to consolidations of physician groups and hospitals, as well as the employment of physicians in hospitals,” said David Blades, associate director, research and analytics at industry, AM Best. “Today, many hospitals have their own captives or self-insurance mechanisms.”

MPL segment net investment income decreased by 11% in 2021, partially offsetting strong realized capital gains and a reduction in underwriting losses. Despite a slight improvement in underwriting results and an increase in net profit to $932 million, the MPL composite experienced a seventh consecutive year of underwriting losses and a combined ratio of 110.1 for 2021.

“AM Best believes operating and underwriting results will likely remain under pressure through the end of 2022, despite much needed pricing actions improving premium turnover,” said Sharon Marks, Director of AM Best. . “AM Best believes underwriting and operating results are likely to remain challenging through to the end of 2022, despite much-needed pricing actions improving premium turnover, coupled with persistent inflation and rising interest rates. interest, are likely to limit any improvement in underwriting results.”

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=319635.

AM Best will host an analytical briefing on the state of the MPL insurance industry on May 5, 2022 at 11:00 a.m. (EDT), featuring key market executives and analysts from AM Best. To register for the side event, go to http://www.ambest.com/conferences/MPL22/index.html.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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David Blades
Associate Director, Industry
Research and analytics
+1 908 439 2200 ext. 5422
[email protected]

Sharon Marks
+1 908 439 2200 ext. 5477
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200 ext. 5159
[email protected]

Jeff Mango
Manager Director,
Strategy & Communication
+1 908 439 2200 ext. 5204
[email protected]


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