With catastrophic weather events a new norm, economic inflation and “nuclear” lawsuit verdicts, the cost of medical malpractice insurance is rising. Understanding how these rates are set can help you decide what insurance provider and policies are right for your healthcare coverage.
How are medical malpractice insurance rates determined?
Medical malpractice (medmal) insurance rates are influenced by a combination of factors, both specific to individual providers and larger market trends.
Here’s a breakdown of some factors that affect your rate:
Specialty: High-risk nurse practitioner specialties, such as obstetrics or surgery, tend to have higher premiums due to the greater likelihood of claims.
Licensure level and autonomy: Clinicians who take on more responsibility in patient care, such as nurse practitioners (NPs) and physician associates (PAs), may face higher premiums.
Location: State laws and the prevalence of lawsuits in a region heavily influence rates. For example, Georgia and Pennsylvania have recently had higher lawsuit verdicts, so rates are higher there. States with caps on damages, for instance, often see lower premiums.
Claim history: Providers with frequent or severe claims may face significantly higher premiums.
Coverage limits: Higher policy limits mean more protection at a higher cost.
Legal trends: Changes in litigation practices, such as new jury awards of $10 million –– known as nuclear verdicts –– affect insurer pricing strategies across the board. “There’s been a rise in private equity-backed litigation, where law firms are financially supported to go after higher settlements,” says Will Sullivan, executive vice president of CM&F Group.
Why are rates increasing?
Medical malpractice insurance rates have been climbing recently, with several factors driving this trend.
Rising claim payouts: The cost of resolving claims has increased. Jury awards in medmal cases are trending higher, reflecting growing financial pressures on providers.
Increased legal activity: More lawsuits and higher legal fees increase the costs insurers must account for when setting rates.
Inflation: As medical costs rise, so does the settlement price tag involving future care or lost earnings.
Many insurance companies implement annual inflationary increases of 3–5%, while CM&F Group has avoided inflationary increases for about 14 years before the pandemic. “With market changes, post-COVID challenges and ‘nuclear verdicts,’ there’s an increase in risk and compounding claim costs,” says Sullivan.
CM&F Group rates are likely to increase slightly in 2025, though it will vary by state and risk profile.
Speak to your insurance advisor about ways to reduce your rates, such as reducing your risk level or joining a member association that can drive down rates as a group.
The importance of a sustainable insurance provider
It’s tempting to shop for the lowest premium when rates are rising. The truth is that sustainability in your insurance company matters.
Unlike auto insurance, where your carrier pays out the costs soon after you make a claim, medical malpractice claims can take years to surface. Your insurance policy this year may not be needed for another eight or more years. When a claim comes up in the future, you want to be sure you weren’t insured by an insurance startup or inexperienced carrier in the insurance niche that’s already gone out of business.
Sustainable insurers are more likely to withstand market fluctuations and honor claims promptly. During tough economic periods, a trusted insurer with a history of supporting healthcare providers is less likely to exit the market or fail.
Established, experienced insurers also provide risk management resources and even one-to-one consulting to help you reduce liability, which can lower your long-term costs and likelihood of making a claim.
“At the end of the day, you need to be prepared for substantial losses and have the insurance you need. You want to work with people who are steady in the market,” says Sullivan.
Better safe than sorry: Why comprehensive coverage matters
When evaluating your professional liability insurance, think beyond the cost of premiums. Robust coverage gives you peace of mind in the present and pays off if you ever need it.
Protect your license and finances: A single claim can cost millions and result in losing your license. Without adequate coverage, you may be personally responsible for significant damages.
Adapting to evolving risks: Healthcare is changing rapidly, and the right insurance policy should evolve to cover emerging risks like telemedicine and cyber liability.
As rates rise, consider your medmal insurance policy a professional investment, protecting your finances and reputation. Being proactive today ensures you’re not left vulnerable tomorrow.
Ready to take the next step?
Explore your options with one of our trusted partners to ensure you have the coverage you need for your practice. Find your professional liability coverage here. To speak to one of our agents directly, reach out using our chat form in the bottom right hand corner of your screen.
