The medical professional liability insurance industry faces new challenges from both health reform and increased competition. A new industry study by Conning Research & Consulting claims that both health care reform and heightened competition will slow growth and profitability for the sector in the future.
“The medical professional liability insurance industry is headed for lower profits and slower top-line growth. This has been a highly cyclical line of business, and cyclical conditions are continuing,” said Jeffrey Thompson, analyst at Conning Research. “Two forces may drive this line of insurance back into unprofitable waters –competition and an increase in loss costs.”
Competition is already impacting market conditions with price-cutting, acquisitions, new entrants, and continued growth of self-insured vehicles, Thompson says. “Loss cost growth has been slower to develop, but we believe a number of conditions are aligning for this to take off.”
The Conning Research study, “Medical Professional Liability in a Changing Health Care Environment: The New Story Unfolds,” analyzes the impact of national health reform on an already stressed medical operating environment. The study also looks at opportunities from these changes, including recommendations for new risk management practices and services, changes in the pricing model, product development, and prospects for new markets to emerge.
“The delivery of health care is changing and this will change the way medical professional liability insurers view and manage risk, defend claims, manage data, price policies, choose markets, and expand,” said Stephan Christiansen, director of research at Conning. “While we see a deteriorating environment for medical professional liability, tools do exist for better-informed companies to drive future performance apart from industry results. No insurer is immune from market forces, yet the degree to which they can insulate themselves is likely greater than they believe.”
Source: Conning Research & Consulting, www.conningresearch.com
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