Medical malpractice premiums have grown significantly more expensive over the past few years. According to a 2022 American Medical Association (AMA) report, 29.5% of premiums rose in 2021, following premium increases of 31.1% and 26.5% in 2020 and 2019, respectively. By comparison, premiums increased only 13.7% in 2018. What’s more, from 2012 to 2018, premiums rose within the range of 12.2% to 17.2%–way less than the reported percentages from 2019 to 2021. Based on data from the Kaiser Family Foundation (KFF), the average family premium has risen 43% since 2012.
The AMA report noted a whopping 80.6% rise in premiums within Illinois and a close rise of 75% in West Virginia for the year 2021. Premiums are not only affected by geography; they are also related to specialty. For example, in 2021, OB/GYNs and general surgeons paid premiums upwards of $215,600. Environments such as these are known amongst the finance sector as “hard markets,” which occur when less competitive markets lead underwriters to stand by more stringent standards, thereby leading to rising premiums.
We’re In the Midst of Another Hard Market
Though alarming, rising premiums are not a novel occurrence. Premiums ebb and flow, rather than remaining high for long time periods. According to the AMA report, 77.4% of physicians in 2003 an 82% in 2004 experienced increased premiums. However, the market softened shortly thereafter, leading to lower premiums. In 2012, 25.7% of physicians experienced lower premiums. Unfortunately, this general stability began to wane in 2018-2019. We now appear to be in the midst of another hard market, as is evidenced by declining underwriting results, decreased loss reserve margins, and lower returns on investment.
It is not always clear as to what causes a turn in the rise or fall of medical malpractice premiums. Based on the AMA report, more time needs to pass before a link between rising premiums and the COVID-19 pandemic can be established. Regardless, the AMA suggests certain strategies for physicians to ensure that their premiums are in check, bearing in mind that insurers are also financially incentivized to strive for a claim-free record. For instance, physicians should look into seeing if their medical malpractice carrier provides risk management tutorials or courses. Physicians should also inquire with any of the professional organizations to which they belong regarding possible insurance discounts offered to members.