2024 Annual Healthcare Market Update

Physicians & Ancillary

In the world of medical malpractice insurance for doctors and healthcare providers, we’re seeing a soft market, just like underwriters are noticing. Standard insurance companies are holding onto doctors longer than they used to, even when it might make sense to non-renew them, and they’re offering rates that are lower and limit structures that are higher than what you’d expect in the current market. But how long can this last with the continued deteriorating legal environment? We continue to see doctors retiring and selling their practices to hospitals at a rapid pace. On the flip side, this is opening new opportunities for cash-based practices to thrive.

• Rapid Advancements in Treatments: The evolving landscape of novel treatments and drugs poses a challenge for underwriters due to limited claim experience and case law to guide risk assessment and rate setting. As a surplus lines market, we navigate these challenges through rigorous risk selection and policy structuring.
• Softening Medical Malpractice Market – Physicians: Despite the market’s softening, providing adequately priced products remains challenging, especially with the ongoing trend of underpricing risks. Additionally, physicians are increasingly offering services beyond their trained specialties, leading to potential risks, compounded by social inflation and the rise in nuclear verdicts.

• Utilization of Deductibles and Pricing: We address claim issues primarily through deductibles and pricing strategies, focusing on primary limits typically at $1M / $3M. We avoid providing coverage for excess MPL and hospitals with higher exposure to multimillion-dollar verdicts.
• Focus on Distressed Providers: Our focus lies on distressed healthcare providers in the E&S marketplace. For those with claims, we modify coverage with sublimits, exclusions, and closely monitor legal climates and legislative changes to adapt our underwriting strategies accordingly.

• Specialized Solutions: We offer Medical Malpractice solutions for challenging exposures like correctional or nursing home risks, distinguishing ourselves through attentive broker-partner relationships and high service standards. While the market may soften, we remain committed to fair pricing and transparent coverage, with plans to enhance our offerings in 2024.

• Emerging Opportunities: Telemedicine and weight loss services are poised for growth in 2024, with physicians launching startups and nurse practitioners establishing autonomous practices. These areas represent promising opportunities for expansion and innovation.

Allied Healthcare

Navigating the vast and complex landscape of the Allied Healthcare insurance sector presents a myriad of unique challenges that demand strategic and creative solutions as well as agile responses. From the imperative need for brokers to possess comprehensive knowledge of carrier appetites to the expertise to evaluate a multitude of structures, services and operations, each aspect requires meticulous and proactive attention. 2024 is poised for continued growth and innovation, lifted by an optimistic outlook and a focus on service excellence and product expertise, to explore and capitalize on emerging opportunities in the Allied Healthcare market.

• Appetite Knowledge: Brokers need to have more knowledge of the carrier’s appetite and coverage parts of the policies. Not knowing this slows response times for everyone. This isn’t typically an issue with Brown & Riding submissions!
• Limits Management: Frequency of severity makes managing limits crucial, with no “safe” venues immune to large verdicts.
• Talent Acquisition: As a rapidly expanding E&S carrier, it’s been hard to find quality underwriting talent. Due to limited WFH (work from home) policies and talent pool constraints.
• Third-Party Litigation Funding: This is only adding to our challenges. Increased trial funding by the plaintiffs bar is showing with the increase in frequency of mega verdicts.

• Strategic Limit Deployment: Managing limits closely and using granular data for risk selection to prioritize low-frequency accounts.
• Risk Quality Selection: Prioritizing low-frequency accounts and managing severity through limit deployment to minimize impact. We believe any venue can present challenges if we insure a low-quality risk.
• Effective Limits Management: This may be the only effective strategy here. We can minimize exposure by offering smaller limits, particularly in cases prone to large verdicts.

• Market Trends: Healthcare PL is still hardening with anticipated rate increases again in 2024. If new capital enters the market this year, this could slow down. Carriers will need to continue to prioritize good submissions/risks.
• Optimistic Outlook: We are anticipating rapid growth and expansion in the underwriting team to meet increased business demands. We continue to see/believe the Allied Healthcare market is profitable.

• Service Emphasis: Prioritizing service with quick submission turnaround and aiming for national expansion in hiring. We will continue to solely support our wholesale broker network.
• Product Innovation: Continuously refining products to creatively address coverage needs while maintaining sustainability.
• Growth Caution: Persisting with sustainable pricing and terms amid aggressive growth goals from competitors.

Hospitals & Health Systems

Some current challenges and issues in medical malpractice insurance for hospitals include:

• Rising Premiums: The increased costs can strain their financial resources.
• Claims Frequency & Severity: The frequency and severity of medical malpractice claims continue to pose challenges. Nuclear verdicts and social inflation are the main factors to the severity increase.
• Legal Environment: Evolving legal landscapes, including changes in tort law and liability standards.
• Patient Safety Initiatives: Hospitals are investing in patient safety programs to mitigate malpractice risks, but these efforts may not always translate into reduced insurance premiums.
• Market Dynamics: Shifts in the insurance market, such as consolidation among insurance providers or changes in underwriting practices, can influence the availability and affordability of coverage for hospitals.
• Telemedicine & New Technologies: The expansion of telemedicine and adoption of new medical technologies introduce unique liability considerations and may affect hospitals’ insurance needs and coverage requirements.
• Regulatory Compliance: Hospitals must navigate complex regulatory requirements, including reporting obligations and quality standards, which can impact their risk profile and insurance coverage. These challenges require hospitals to implement comprehensive risk management strategies, collaborate with insurers, and stay informed about legal and industry developments.

• Pricing Challenges in Specific Venues: Pricing and structuring coverage in challenging venues like New Mexico pose difficulties in offering adequate coverage while maintaining profitability, leading to selective coverage decisions.
• Renewal Pricing for Hospitals: Pricing renewals for hospitals, especially those sold off from large owners like HCA or CHS, present challenges due to limited updated loss information.
• Roll-Up Acquisition Exposure: Underreporting roll-up exposure in acquisitions adds complexity to risk assessment and coverage structuring.
• Managing Capacity in High-Verdict Venues: Being cautious about capacity in venues with higher prevalence of large verdicts, coupled with ensuring proper claims handling processes for catastrophic claims.

• Capacity Management and Venue Selection: Reducing capacity, being selective in certain venues, and considering higher attachments while maintaining rate increases to address severity concerns.
• Claims Handling Restructuring: Restructuring claim handling processes to identify and address claims with high catastrophic potential early, ensuring frequent discussions on settlement/trial strategies, and positioning insurers for optimal defense.

• Focus on Service and Underwriting Flexibility: Emphasizing service, underwriting flexibility, superior claim handling, and policyholder resources to differentiate the product, expecting continued growth while maintaining profitability in 2024.
• Targeted Pricing Adjustments: Correctly pricing risks initially and at renewal, allowing for spread of risk to absorb variations and seeking appropriate pricing on each risk to ensure consistency across the portfolio.

• Quality Considerations in Hospital Selection: Hospitals increasingly prioritize insurers that offer value beyond risk transfer, particularly in lead layer placements.
• Managing Exposure to Severity Trends: Hot topic across underwriters involves strategies to limit exposure to ongoing severity trends, particularly in physical and sexual abuse cases.

Human & Social Services

This industry segment poses one of the most significant challenges in our specialization currently. Capacity cuts and appetite changes from the largest standard market carriers has created an influx of accounts into E&S marketplace that is causing havoc. The three primary issues are occurrence form triggers, rating differences, and limits. Due to these items, we have limited carrier options, new supplemental applications that have different rating exposures (# of beds instead of square footage), and oftentimes insureds are purchasing lower limits due to the substantial cost difference, sometimes up to 5x from expiring insurance program. We are seeing more E&S carriers broadening their appetite and entering the Human & Social Services segment in 2024.

• Identification of No-Fly Zones: Discovering social services adjacent no-fly zones during the account review process adds complexity to underwriting, especially in high-volume areas with complicated accounts. Examples are correctional facilities, hospitals, risks with high suicide patients or inpatient residential facilities such as post-incarceration housing, detox, and group homes.
• Limits and Terms Management: Prioritizing limit and terms management, especially in navigating coverage challenges like Abuse and HNOA to structure coverage for correlating exposures, remains crucial for underwriting decisions.
• Programs and Services: Monitoring exposures such as Inpatient, Youth, Detox and Medication Assisted Treatment​, Implementation of Non-FDA Approved medications or treatments.
• High Rating Impact: Services that require high levels of supervision or specialized skill​. Medical exposure and Physician Direct Patient Care​. Inpatient Detox risks.

• Avoiding Auto Exposures: Implementing strategies to avoid auto exposures, including transportation exclusions and auto exclusions on all coverage parts, to manage claims severity and frequency effectively.
• Limits and Venue Management: Employing limits management strategies and conducting daily discussions on venue management to mitigate risks, along with utilizing risk calls with customers for deeper understanding of services and management oversight.

• Personalized Risk Calls: Leveraging in-person and virtual risk calls to understand clients better and tailor robust terms for superior coverage and claims services, while offering flexibility for price-sensitive insureds through updated sublimits and exclusions.

• Client Response to Limited Capacity: Observing interesting client responses to limited capacity in the marketplace, with some clients paying high premiums to fulfill contract requirements, while others abandon higher limits to save on costs. Monitoring how this trend evolves over time is key.

Senior Care

Due to an increase in the number of carriers writing senior care, needed rate increases have not been as pronounced, which has been a welcomed benefit to insureds. However, staffing shortages and the need for additional assistance across all acuity levels persist. We continue to observe losses and severity increases across all senior care classes. The legacy carriers with substantial existing business are the ones trying to push rate as much as they can, but when faced with competition on the account, they will also do whatever they can to retain it. The new carrier capacity has created a false sense of optimism as though the senior care segment is improving and becoming a soft market. However, if the new capacity does not have staying power, we can expect rates to firm up quickly and carriers will get very picky again.

• Information Deficits: Difficulty in obtaining accurate loss and exposure projections as well as history. Prior owner loss runs and exposures during acquisitions is crucial for assessing risk. Incomplete operational data during acquisitions, at renewal, or new business review can hinder underwriting terms.
• Rising Severity Losses: Typical claims, such as ulcers & falls, are experiencing increased severity. Venues that typically were not seeing claims are now experiencing an increase in severity. These factors are affecting pricing strategies on a nationwide basis versus targeting rate solely in those hard-to-place venues.
• Unsolicited Quotes: Challenges arise when unsolicited quotes, with favorable pricing, must be presented by brokers, potentially binding against original intentions.
• Flawed Financial Reimbursement Model: Aging operators and emerging profit-driven owners pose challenges, compounded by staffing shortages and exponential growth in memory care.
• Naive Underwriting: Capacity is on the rise, resulting in some stabilization of rates when the rates should outpace inflation. Excess & Surplus lines primary-focused markets remain challenged in competing in better venues or good accounts in “red” venues against packaged products including large umbrella limits.

• Risk Management Credits: Offering reimbursement-based risk management credits for interested insured parties to be used with reputable third-party companies.
• Adjusting Limits: Offering lower limits in venues prone to severity verdicts and introducing optional sublimit endorsements for specific claim issues.
• Careful Approaches: Approaching challenging venues cautiously, considering defense inside and lower limits.
• Limits Management: Setting maximum limits per claim and minimum retentions, with selective use of exclusions and risk selection.

• Continued Competition: Increasing competition, including from risk retention groups (RRGs) and traditional carriers, leading to lower pricing.
• Rising Severity: Uncertainty regarding severity trends, with notable high-value verdicts and factors like inflation and government regulations affecting outlook.
• Continued Rate Decreases: Despite rising claim costs, focus on service quality, expanding into allied health space, and maintaining differentiation through expertise and service levels.
• Rate Stabilization: Anticipating stabilization in 2024 with new capacity entering the market and differentiation based on coverage strength and partnership with brokers.

• New Trends: Good operators are aging out and a new crop of owners are emerging that falls into the predatory law firm tactic of “profits over people.”
• Staffing Shortages: Continue to plague the industry. Memory care is growing exponentially, and staffing is lagging behind.

Digital Health

In the dynamic landscape of Digital Health insurance, 2023 was the year of transition. Prior to, the market was historically controlled by two carriers. Last year, additional markets emerged presenting a breadth of opportunity relative to appetite, policy structure, capacity, underwriting expertise, risk management, and claims services. There are a multitude of unique challenges that demand constant vigilance and adaptation from brokers specializing in this space. This introduction sets the stage for an exploration of the strategies and opportunities in 2024 to effectively pursue this unique telehealth insurance marketplace.

• High limit requirements associated with contracts with health plans, especially concerning cyber insurance due to the sensitivity of data involved.
• Increased data interoperability leading to a larger accumulation of sensitive Personal Health Information (PHI) and Personally Identifiable Information (PII).
• Growing regulatory oversight and Department of Justice investigations, necessitating thorough compliance measures.
• Struggles with headcount, training burdens for new hires, managing high-touch accounts, and handling a higher volume of submissions than available time.

• Utilizing carrier-dedicated applications to manage cyber perils and enhance the risk management of insureds.
• Appointing strong panel counsel to handle claims effectively.
• Developing a digital health risk management program for insureds covering various risk management and regulatory topics in the sector to be offered at a preferred rate.
• Managing limits and increasing retentions to control exposure.
• Recognizing the nuanced nature of venue underwriting for telehealth due to the geographical separation between entities, providers, servers, and patients across multiple jurisdictions. Despite this complexity, applying established underwriting principles effectively by treating telehealth claims similarly to traditional in-person claims.
• Collaborating closely with the Cyber Risks Division and broker partners to stay competitive and educated in the technology/cyber space.

• Evolving policy forms with stronger regulatory Errors & Omissions (E&O) wording and coverage enhancements within the base policy framework.
• Expressing enthusiasm and a positive outlook for the year ahead, despite increased competition in the telehealth market. Advantages lie in underwriters’ experience and specialized knowledge in digital health.
• Offering a comprehensive, modular policy form designed to be adaptable regardless of how care is delivered. This approach contrasts with other carriers that have separate forms for virtual and traditional miscellaneous medical coverage.

• Artificial Intelligence (AI): With AI playing an increasingly significant role in patient care, there’s a need to assess the balance between technology and human oversight.
• Prescribing Guidelines and Predatory Marketing: Concerns about over-prescribing via telehealth platforms, particularly in areas such as mental health and weight management medications, are growing.