Over the past few years, the landscape of medical malpractice insurance has seen various changes that cause increased premiums. The rise in premium cost has sparked debate among healthcare professionals, policymakers, and insurers alike. To understand why insurance rates are on the rise, it is crucial to unpack the range of factors that contribute to this complex issue.

Rates reflect the growing trends in the medical professional liability claims environment. Trends impacting premium rates include:

• Claims severity and frequency have increased and continue to rise
• Social and economic inflation make claims costs much higher
• Excessive verdicts which are often referred to as “nuclear verdicts”
• Legislative changes in certain states that are more favorable to plaintiffs

Claims Severity & Frequency
One of the primary reasons for rising insurance rates is the increase of both the frequency and severity of medical malpractice claims. With an evolving healthcare landscape, improved technology, and heightened awareness among patients regarding their rights, the inclination to take legal action has increased while the awards received by plaintiffs are also growing. Additionally, the cost to defend doctors has increased by as much as 200%.  

Social & Economic Inflation
Economic conditions and market dynamics also impact insurance rates. In times of economic instability, responsible insurance companies increase premiums to offset losses. Social inflation refers to the societal and cultural aspects that influence the outcome of litigation and drive up the costs associated with insurance claims.

Excessive “Nuclear Verdicts”
The financial compensation awarded in malpractice lawsuits is on the rise, reflecting the increased costs of healthcare and the growing expectations of patients. Nuclear verdicts refer to exceptionally large monetary awards granted by juries in medical malpractice cases. These verdicts typically result in damages that exceed what is reasonable based on the circumstances of the case. And in some instances, juries have awarded higher amounts than the plaintiff even requested.

Legislative Changes

Legal and regulatory issues also play a role in shaping insurance rates. Changes in legislation, court rulings, and regulatory requirements all contribute to rising insurance costs. Reforms aimed at improving patient rights and access to justice may inadvertently make costs higher for insurance by expanding the scope of compensable damages.

State-specific laws that favor plaintiffs are also on the rise. For example, the Pennsylvania Supreme Court’s decision to eliminate an important rule governing where lawyers may file medical liability claims has resulted in plaintiffs from across the country flocking to plaintiff-friendly venues like Philadelphia where excessive verdicts are common. In Illinois, a pre-interest judgement law added millions to the cost to defend liability allegations.

Taking Steps to Address the Trends

All of these trends directly contribute to the cost of premium rates increasing. To address these trends and continue to protect our insureds, PICA utilizes rates, credits, and debits that are all filed and approved with each state’s Department of Insurance. In some instances, we have had to take additional underwriting action on those higher-than-average risks and those who have multiple claims. There is no quick-fix solution to this multifaceted issue, but we do know that focusing on risk awareness and patient safety becomes even more critical.

Additional Resources for Further Reading

• Nuclear verdicts are ‘getting measurably worse’: ProAssurance’s Francis
• Judicial Hellholes 2023-2024 Executive Summary Report
• Malpractice mega-verdicts skyrocketing: 5 numbers to know
• Nuclear Verdicts: Trends, Causes, and Solutions

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The information contained on the PICA Blog does not establish a standard of care, nor does it constitute legal advice. The information is for general informational purposes only. We encourage all blog visitors to consult with their personal attorneys for legal advice, as specific legal requirements may vary from state to state. Links or references to organizations, websites, or other information is for reference use only and do not constitute the rendering of legal, financial, or other professional advice or recommendations. All information contained on the blog is subject to change.