Medical Liability Insurance Premiums Continued to Increase in 2021

Nearly 30 percent of medical liability insurance premiums increased in 2021, continuing the trend of rising premiums that medical practices have been seeing since 2019, a report from the American Medical Association (AMA) revealed.

The report consisted of October 2021 data from the Annual Rate Survey Issues of the Medical Liability Monitor (MLM). The MLM surveys major US liability insurers every year and reports changes in medical professional liability insurance premiums. The data includes premiums for obstetrics/gynecology (OB/GYN), general surgery, and internal medicine physicians.

The latest analysis revealed that in the past year, a large share of medical liability premiums have once again increased.

As more medical liability premiums see year-to-year increases, physician practices may face adverse consequences.

“The medical liability insurance cycle is in a period of increasing premiums, compounding the economic woes for medical practices that struggled during the past two years of the pandemic,” Gerald Harmon, MD, president of AMA, said in a press release. “The increase in premiums can force physicians to close their practices or drop vital services. This is detrimental to patients as higher medical costs can lead to reduced access to care.”

Between 2010 and 2018, medical liability premiums were generally stable. The upward trend in premiums began in 2019 when 27 percent of medical liability premiums increased—double the share of premiums that increased in 2018 (13.6 percent).

A greater share of premiums rose again in 2020, with 31.1 percent of premiums escalating. The percentage dropped only slightly to 29.5 percent in 2021.

Certain states saw higher increases than others. The report noted that 12 states saw premium hikes of 10 percent or more. Illinois had the largest proportion of premiums that increased by at least 10 percent, at 58.9 percent of premiums. The following share of state premiums also saw price increases of 10 percent or more:

• West Virginia (41.7 percent)
• Missouri (29.6 percent)
• Oregon (20 percent)
• South Carolina (16.7 percent)
• Idaho (11.1 percent)
• Kentucky (7.4 percent)
• Delaware (6.7 percent)
• Washington (6.7 percent)
• Michigan (5.4 percent)
• Texas (4.9 percent)
• Georgia (3.7 percent)

In these states, the most significant premium increase was 35.5 percent in Illinois, while Idaho and Washington saw 10 percent increases.

The AMA analysis also revealed premium differences based on location and specialty.

For example, OB/GYNs in Los Angeles County, California, had a base premium of $49,804 in 2021, while OB/GYNs in Miami-Dade County, Florida, faced based premiums of $215,649. General surgeons in New Jersey faced a base premium of $60,810, while surgeons in Nassau County, New York, had premiums of $146,353.

The differences were apparent in general medicine as well. General medicine physicians in Los Angeles County faced premiums of $8,274, while physicians in Miami-Dade County faced base premiums of $53,912.

AMA said it expected insurers to push for higher premiums in 2021. In 2020, insurers started raising premiums in response to the early stages of a hard market, deteriorating underwriting results, lower loss revenue margins, and lower returns on investment.

The premium price surges have coincided with the COVID-19 pandemic, but the report noted that the long-term effect of the pandemic is still unknown and it has not affected base premiums yet.

AMA has partnered with state medical societies to pursue medical liability reforms and help maintain medical liability premium stability for practices and physicians.

As the healthcare industry faces staffing shortages, rising liability premiums may only exacerbate the crisis. High premiums could also force physicians to limit the care they provide or raise the cost of services, harming patients and making it difficult for them to access care.