New Jersey Medical Professional Liability Insurance Companies Show Profits

Tuesday’s Post 11/15/11 – Insurance ratings firm, A.M. Best,  released a report indicating that Medical Professional Liability Insurance (MPLI) providers in New Jersey are enjoying stong profits.  The report, released on the 2nd of October, evaluated MPLI market conditions that prevailed from 2010 to the beginning of 2011. Notable issues covered by the report include tort reforms, mergers and acquisitions, and the increasing tendency of hospitals to take over physician groups.  The report also highlighted that rates, operating leverages and balance sheet equities registered tremendous improvements within the last year, defying a dip in premium volume. According to A.M. Best’s report, MPLI writers posted impressive operating earning performances against an even claim trend and a slight rise in  average claim severity. The last year has seen MPLI carriers investing time and energy in instituting appropriate enterprise risk management processes and cycle-management methods.

Key highlights of the year 2010 contained in the report include:

•The MPLI financial year loss-adjustment expense (LAE) and pure loss stagnated at about 60% in the last three years, consistent premium revenue dips in the same period notwithstanding.

•Acquisitions of physician groups by health care organizations and integration of them into the insurance programs of those organizations, including captive insurers, are gradually showing a competing trend for MPLI business by the health care organizations in question.

•The insured dividends reached a record peak of 5.3%, a level unprecedented in the last five years.

•The MPLI market still stayed ahead of the aggregated US property/casualty industry segments in important financial pointers, including net investment earnings, operating ratio and combined ratio.

The report also suggested justifications for reductions in claim frequency rates. A.M. Best says in their report that a majority of industry players agree on the following as possible causes of claim frequency’s downward trend:

•Implementation of best-in-class patient care practices by health care providers.

•Emphasis on education.

•Widespread adoption by practicing health care providers of risk management strategies.

 The report also predicts that the future medical professional liability environment will be shaped by the following key factors:

•The execution of new health care provisions in line with the health care reform agenda.

•Inflation impacts on the delivery of health care products and services.

•The success of health care cost management programs such as Accountable Care Organizations (ACOs) and other similar programs.



Michael E. Dortch
President &  Managing Agent
Corporate Home Office
618 South Broad Street
Lansdale, Pennsylvania  19446
(800) 807-0762  ext. 602