In the face of rising medical malpractice claims, excess and surplus (E&S) insurance companies are stepping up to fill a growing gap in healthcare liability coverage. With traditional insurers pulling back, especially from high-risk areas, E&S carriers are using innovative data analytics to assess and underwrite risks that others might avoid.
The situation is pressing. In 2023, there were 57 medical malpractice verdicts that exceeded $10 million, and this trend is expected to continue into 2024. As healthcare providers face increasing liability exposure, particularly in sectors like senior living and outpatient care, the need for flexible insurance solutions has never been more critical.
Michael Walder, vice president of healthcare programs at Nationwide, emphasizes the importance of adaptability in today’s healthcare landscape. He points out that E&S insurers are uniquely positioned to respond quickly to changes, thanks to their ability to craft policies tailored to the specific risks of each facility. This flexibility is crucial as healthcare operations become more diverse and unconventional.
E&S carriers are leveraging advanced data analytics to gain a clearer picture of risk. Unlike traditional methods that rely on historical data, these analytics provide real-time insights, allowing insurers to understand the unique legal environments and claims histories of individual healthcare providers. This approach not only helps in accurate pricing but also enables coverage of risks that standard insurers might reject.
Walder highlights that collaboration with healthcare providers is essential. By working together early in the risk management process, E&S insurers aim to prevent issues before they escalate into expensive legal battles. This proactive approach is a shift from merely reacting to claims; it focuses on embedding support and risk management strategies within the insurance relationship.
The rise in "nuclear verdicts," which are jury awards exceeding $10 million, is a significant concern for the industry. Walder notes that the number of such verdicts has skyrocketed over the past decade, from just six in 2013 to 60 last year. As traditional carriers withdraw from these high-risk areas, E&S insurers are refining their underwriting practices and offering more customized options to meet the needs of healthcare providers.
Ultimately, the success of E&S carriers hinges on building strong partnerships with brokers and healthcare providers. By fostering these relationships, they aim to improve patient outcomes and reduce liability risks. As the landscape of healthcare liability evolves, E&S insurers are proving to be a vital part of the solution, ready to tackle the challenges ahead.