Losses above $5 million in the US healthcare insurance sector are accounting for a rising proportion of total dollars spent in claims.
That is the view of specialist healthcare insurer Hiscox, which reports that in the early 2000s the percentage of total dollars spent in claims for losses of $5 million and over was in the 7.5 percent-10 percent range per year. That figure has moved up into the 15 percent-25 percent range, and is expected to go higher still.
The continuing incidence of the healthcare super loss – losses above $50 million – is also having a clear impact on this trend with 50 percent of the largest medical malpractice claims paid in history coming in the past five years.
Justin Keith, vice president, Hiscox, said: “This increase in the proportion of dollars spent in claims on losses above $5 million for medical malpractice is a worrying trend for US healthcare. And we know that 2014 is shaping up to make the figures look even worse.
“US healthcare reform is having both a positive and negative impact on these costs. On the plus side, we’re seeing better risk management, improved patient safety programs and a seemingly positive affect of Accountable Care Organizations on quality, all while claims handling has become much better. And we are also seeing many positives coming from the significant investments in resources and talent.”
On the flip side, however, he said there is significant disruption generated by an increased number of healthcare facilities’ mergers and acquisitions, accompanied by a fundamental shift in the business of delivering healthcare and a squeeze on margins.
“When it comes to litigation, the effects of all of this change on jury pools remain uncertain at best, but as community hospitals start looking more like big business it's no surprise juries appear to be handing out larger awards,” he said.
“Some recent market losses, however, have come from high quality facilities which, even though they can demonstrate excellent leadership, risk management and in-house claims teams, proves that big medical malpractice claims can strike anyone at any time. It sounds a warning to those insurers who simply see medical malpractice as a profitable makeweight to their other lines of business.”
Hiscox, Insurance, Justin Keith, US
