MPL claims severity 'rearing its ugly head again': panel

By Chris Munro

May 13 - (The Insurer) - Medical professional liability claims severity is re-emerging as a major pain point, with large claims getting bigger while carriers contend with a shifting legal environment, panellists on an AM Best webinar said.

Newly published data from AM Best shows that 2024 was the 10th consecutive year of underwriting losses for the ratings agency’s MPL composite, which comprises insurers whose primary line of business is medical or hospital professional liability coverage.

The composite posted a combined ratio after dividends of 107.7% in 2024, improving 2.3 points from 2023’s 105.4%.

During a webinar on Tuesday to discuss the report’s findings, Chad Karls, principal and consulting actuary at Milliman, said claims severity in the MPL market “seems to be rearing its ugly head again”.

Karls said the current trend is similar to what the market was contending with six to eight years ago prior to the pandemic.

Once the pandemic hit, claims adjudication and claims settlement slowed significantly. That caused the average open claim duration to increase significantly in 2023 and 2024, and it remains elevated, he explained.

“(Claims duration) was up 25% to 30% across the country, and it remains so,” he said.

“The good news is we are seeing that coming back down. The average open duration is trending back down towards where it once was, but it's still elevated even in 2025,” Karls noted.

The extended claims duration is partially to blame for the rising claims severity, Karls suggested: “It's going to be a few years until we get this completely behind us. I’m certainly of the opinion that severity is back.

“The large claims are becoming larger. To a certain extent, the $75,000, the $125,000 claim of the past is still the $75,000-ish, $125,000-ish claim. Those are kind of still the same.

“The problem is the $750,000 claim is now $1 million, and the $1 million is now $2 million, and the $2 million is now $5 million,” he said.

While increasing severity is causing concern on larger claims, Karls said the frequency of losses remains stable.

“From a claim cost perspective, I still don't see frequencies being an issue. It's really a game of severity at the moment,” Karls said.

The escalating severity of larger claims has obvious ramifications for MPL carriers’ reinsurance purchasing, Karls said, along with the retentions they have to carry on those programs.

SHIFTING LITIGATION ENVIRONMENT

On the webinar, Eric Anderson, interim president and CEO of industry trade body the MPL Association, commented that the current litigation environment for carriers operating in the sector “is a bit different from the past”.

Notably, Anderson said societal and cultural shifts are affecting juries, in particular the way they process, interpret and respond to information.

And while Anderson acknowledged there is talk about it being a generational issue, he said “it's not just really one demographic”.

“Attention spans for jurors across the board, they're shorter than they've ever been,” he stated.

“The defense counsel are having to change their tactics. They're having to present more graphics and visuals. They're generally having to find ways to get their message across in a simpler and easier-to-process manner,” said Anderson.

“More and more, regardless of political ideology, jurors are to some extent looking to make the system pay,” he stated.

“This could be an entity, an organisation, a structure that they view as not necessarily operating fairly or meeting their needs. The healthcare system, healthcare professionals, MPL insurers: they're not immune from this perception that jurors have.”

Anderson said it is challenging in today’s courtroom to convince a jury on the individual merits of a case, as opposed to what is being alleged and presented by the plaintiff’s attorney.

“To get (a jury) to think objectively, to not let what they think about the healthcare system, or maybe an experience they had in the past with a healthcare provider, influence their decision, it's not an easy task,” said Anderson.

In the long term, Anderson said the industry needs to build a bench of skilled and experienced defense counsel to help address these issues.

But as he explained, that is tough because fewer cases are now going to trial.

“(When we do go to trial) we need, really, the most experienced attorneys possible to be handling these cases, so unfortunately this doesn't leave as much room for the younger, very capable but still developing, attorneys to get the experience they need.”

LITIGATION FUNDING IMPACT

During the webinar, Anderson also discussed litigation funding, a market he said poses a challenge not just for MPL insurers, but also the legal system and the injured patients themselves as “they often don't even know or understand the ramifications of entering (into such) an agreement”.

Anderson said the MPL Association supports reforms that would increase transparency in the legal process.

He highlighted recently introduced bills in states such as Florida that would require the full disclosure of third-party litigation funding agreements.

“This allows the courts and the litigants to really understand who's controlling that litigation,” he said.

“I think it's a critical point for MPL insurers, because these funding arrangements can really alter the plaintiff approach to negotiations, and if we don't know that that funding exists, well, it certainly puts us at a disadvantage.”