What to Expect from the Physician Insurance Marketplace in 2023

The physician insurance market remains chaotic as we start a new year in 2023. Healthcare pricing for employee benefits continues to rise, the malpractice marketplace is still hardening, cyber threats continue to target the healthcare industry, and social inflation and third-party claim funding are both promoting larger settlements and verdicts.

Third-Party Litigation Funding (TPLF)

TPLF was historically used to finance large class action suits. Today, however, the tactic is being used in more mainstream-style litigation. The concept is simple, in return for cash today, the funding party accepts a percentage of any settlement in the future. This can lead to a reluctance or delay in the settlement process as the plaintiff now has some upfront cash flow.

Pre-Judgement Interest

Tacking on pre-judgement interest to malpractice verdicts can be a very costly endeavor, not only for insurance carriers but physician defendants as well. As we all know, malpractice cases are very complex and typically take years to go through the system. Adding a 5-7% annual interest rate to any payment can add up fast. How insurers will react to covering these costs is another concern. Many carriers are already taking rate increases to fund anticipated law changes, which further adds to a hardening market.

Social Inflation

Inflation, nuclear verdicts and changing demographics in the jury pool all seemed like buzzwords and catchphrases a few years ago; however, the results in higher jury verdicts and settlements outside of court are proving they are real. While soft in nature, social inflation trends seem like they are here to stay, unfortunately yet another component contributing to a prolonged hardening and adjusting marketplace.

Telehealth Evolution

COVID escalated the use of TeleHealth faster than anyone anticipated. With that escalation comes a lot of unknown legal issues. One thing we did figure out very soon was that TeleHealth increased the amount of interstate provider care, adding complexity to an already complex situation. Evolving legal issues involving standard of care, misdiagnosis and technology misuse are all becoming pervasive in the court system. How insurers will respond to this uncertainty is still to be determined.

Cyber Liability

Hackers still perceive the healthcare industry as a target-rich environment. Many smaller physician groups rely on their malpractice policy endorsements to cover this exposure. While a good gesture from the carriers, many of these endorsements are not comprehensive in scope and create a false sense of security when addressing this exposure.

Unfortunately, a large amount of uncertainty in the insurance markets, coupled with uncertainty in the financial markets, continues to create a hazardous environment for physicians, physician insurers and the general public.