Medical liability insurers see reduced premium revenue

Medical liability insurers continued to face a sluggish market, with direct premium collections down for the second straight year in 2014, according to a Modern Healthcare review of data supplied by A.M. Best Co. Total premium revenue dropped 1.3% from 2013 to 2014, after taking a 2.5% dip from 2012 to 2013. The last time the industry saw growth in direct premium revenue was in 2006, when it grew by 3%.

A favorable climate for risks and claims has resulted in a slight reduction in the frequency of medical malpractice claims for a number of years, said Brian Atchinson, CEO of the Physician Insurers Association of America.

Just seven of the top 25 liability insurers collected more premium rev- enue in 2014 than in the previous year. Atchinson said the varying results for premiums collected are related to carriers’ different structures. For example, Berkshire Hathaway, the company that wrote the largest amount of direct premiums in 2014, includes a number of organizations that serve different sectors of the marketplace, he said.

Changes in the healthcare delivery system are altering the types of institutions that liability carriers are underwriting, Atchinson said. Some companies are moving aggressively into nonhospital markets such as surgery centers and ambulatory care centers. All carriers are making decisions about how they are underwriting midlevel practitioners such as nurse practitioners, midwives and physician assistants.

One carrier that saw an increase in 2014 direct premiums was the Controlled Risk Insurance Company of Vermont, which saw a 4.5% uptick. The company attributed the gain to growth in the number of physicians, clinicians and healthcare organizations it insures within its member risk- retention group, said Ellen Varney, the company’s chief financial officer. The carrier insures the Harvard Medical School teaching hospitals, their affiliates and employees.

Atchinson argued that even though liability premiums have stabilized since their rapid growth in the early 2000s, statutory caps on damages are still necessary.

But premiums have been flat or declining since 2006, even in states that have not imposed damage caps, according to liability experts.

They attribute the trend to competition in the insurance market, fewer claims, hospitals hiring more physicians, and insurers’ success in defending against claims.