Experts Have Conflicting Forecasts On Maryland Medical Malpractice Insurance Premiums

There is considerable speculation regarding the outlook for rates of medical malpractice insurance. Nationally, rates have declined in the past decade, largely stemming from legislation regarding tort and safety improvements in the industry. The volume of claims has declined overall; however, the size of the claims themselves has increased. The Medical Liability Monitor (MLM) monitors three highly volatile medical specialties to gauge the market, which they say has been relatively flat. These findings are contrary to what we hear from some members of Congress who consider the market to be in a state of crisis.

Maryland Medical Malpractice

Medical malpractice insurance protects healthcare providers who encounter liability from negligent acts. Providers found to have failed in their duty to adhere to the current standards for medical care may face liability. Prior to 2005, physicians in Maryland faced sharp rises in medical malpractice insurance premiums. Several insurance companies exited the market due to tremendous instability. Tort reform has since brought more stability to the market. Medical Mutual of Maryland dominates the market in the state with roughly 44% market share.

American Society for Risk Management Study

Chad Karls, who leads an actuarial and consulting firm in Wisconsin, says that “upward pressure” on medical malpractice rates is starting to occur. Karls is cautiously optimist about the rates in the upcoming years. Last year, an American Society for Risk Management study suggested there is unlikely to be an increase in the volume of claims that are under $2 million. They did find that the number of claims valued at over $5 million should rise. Batch claims, which are multiple claims from recurring behaviors, are also expected to increase.

Market Rates

There is currently a lack of competition among insurers; however, one or two more are expected to enter the market in the next year, which may reduce premiums. Paul A. Greve Jr., of Willis Towers Watson Healthcare, explained that attorneys for plaintiffs seem to only be pursuing malpractice claims they believe are very likely to have a positive outcome. Because of consolidation among medical providers, there are fewer buyers of malpractice insurance and that may keep pricing competitive. Roughly 14% of malpractice insurance providers reported an increase in claims exceeding $1 million.

Legislative Impact

The Maryland state legislature is reconsidering their policy on who may serve as medical expert witnesses involving what is referred to as the “20% rule”. Currently, doctors who provide expert testimony may not dedicate more than 20% of their professional time each year to such activity. Opponents feel the change would lead to more “professional medical expert witnesses” and increase rates. Meanwhile, the national legislators are still considering tort reforms they feel will reduce frivolous claims and reduce the practice of “defensive medicine” that drives up overall healthcare costs.

Maryland Compared to Other States

• Maryland: Average cost: $9,869; Minimum requirements: none
• Pennsylvania: Average cost: $11,952; Minimum requirements: Must maintain $1 million in coverage and a $3 million yearly total (aggregate)
• Virginia: Average cost: $8,952; Minimum requirements: none