The Hard Market and How Insurers are Fighting the Trend

As the medical malpractice insurance market hardens, business leaders are evaluating their strategies to best position their organizations for success. This might include coverage exclusions or the use of deductibles. But we also hear that they are focusing on improving their breadth and depth of data, and innovating new ways to support their insureds through these uncertain times.

AND IN THIS CORNER: THE HARDENING MARKET

Earlier this year, Todd Burgener (Managing Director at Marsh) spoke with our national claims committee on the hardening market in the medical professional liability (MPL) space. He articulated the factors that define this downward swing, and the challenges that carriers face competing in this space. They include:

  • Spiking prices
  • Reserve deficiencies
  • Depressed demand (M&A activity, consolidation, physician employment)
  • Reduced limit exposure
  • Increasing Loss severity (8-figure jury verdicts)

Add to this daunting list COVID-19 and the unknowns from the dramatic surge of Telehealth, as well as the effects the MeToo revolution is having on multi-party claims of sexual harassment, it’s not surprising that more insurers are leaving this unpredictable arena, than dare to enter.

The ones who are sticking around, however, are gloving up and developing a formidable one-two punch. They are betting that their left-right combo of investments in both their data and in their insureds will ensure them victory over this hard cycle, and future market swings to come.

PUNCH ONE: DATA

In my conversations with our clients and commercial prospects, nearly everyone is doubling down on their data strategy. They are rapidly constructing cloud warehouses and data lakes, hoping that by importing an array of intelligence, from diverse sources, they’ll be able to fashion a clearer picture of their risk. They are investing in everything from AI to external data sets in hopes of enhancing their processes from settle/deny decisions and reserve setting, to claims management and underwriting.

The open question I hear repeated is—will these new analytics be sufficiently predictive and provide the ROI they need to justify the expense? One SVP of Business Intelligence, in a candid moment, said that while he had high confidence in his team and their approach, there is the risk that “more data may not mean better insights.”

But a data approach that effectively defines and catalogs a carrier’s own financial, legal and medical record information produces more confidence in the results. Because it relies less on an external matrix of imported tables—and instead plumbs more deeply and comprehensively into the organization’s own data sets—there is increased confidence in the results by the consumers of the data.

PUNCH TWO: PEOPLE

As carriers are forced to increase premiums, they need data that not only improves processes, and saves them on indemnity and reserves, but they also need the details that can tell the story of each loss. The claims and legal records can capture what happened, and where. But why the error happened—the specific confluence of issues that caused the tragedy—that is essential to tease out in order to prevent it from happening again.

These data narratives are pivotal for education, and training, and it’s important that they are informed from the medical record and are written in the clinical language that resonate with physicians. While most carriers are far from the point of care, they still seek to increase their services and better support their providers. This may come in the form of publications with benchmarking and comparative data, risk management services, support and counseling during malpractice trials and even building online communities so they can speak directly to their providers, and the providers can speak to each other.

The most effective approach to survive this hard market requires that carriers are not only building warehouses, but communities. And that both are infused with data that saves time, money and lives.

Todd finished his presentation to our claims committee by quoting AM Best.

"AM Best predicts the better performers and long-term survivors will be those able to effectively use innovation to identify and appropriately price existing and emerging underwriting risks; find new ways to bring new added-value products and services to the market; improve efficiencies and reduce expenses; and maintain, or even gain, competitive advantages."

To those still in the ring, keep your dukes up! Mine all your data—clinical, claims and legal—and fight to support your providers, while building a community. Do this, and you might just carry the Championship Belt out of the ring.

What are you doing to address the hardening market? Leave a comment below or email me!

Written By
David_Whitley_WEB
David Whitley
David was the Director of Growth and Innovation for CRICO Strategies. In this role, David worked to bring new product offerings and services to the marketplace, as well as to grow the national CBS Community.
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