New medical liability insurance offering prices risk more accurately

Len Strazewski , Contributing News Writer

Medical malpractice insurance rates were stable for a dozen years, allowing the liability coverage to be a relatively low priority for many physicians. But times have changed since the COVID-19 pandemic, according to Mike Hegwood, assistant vice president of AMA Insurance Inc., an AMA subsidiary. And rates have been on the rise.

AMA Recovery Plan for America’s Physicians

After fighting for physicians during the pandemic, the AMA is taking on the next extraordinary challenge: Renewing the nation’s commitment to physicians.

A recent analysis by the AMA (PDF) indicated that, last year, the proportion of medical liability insurance premiums that increased from the previous year was 36.2%—the highest rate seen since 2005.

And among the premiums that increased last year, the average hike was 8.1%.

“For the last 10 to 12 years, medical malpractice insurance rates were stable, but for the past three years we have seen a dramatic increase in rates,” Hegwood said. “The COVID pandemic, increasing burnout rates and a broken medical liability system have all contributed to an increasing number of liability claims and more serious liability for a broad range of physicians.”

The increase posed serious cost problems for physicians, he noted, but also created an opportunity for AMA Insurance to help address the increasing costs of medical liability insurance for many physicians, with coverage that was more accurately priced based on an analysis of individual practice claims and risk.

AMA Insurance and Indigo, a new insurer from Charleston, South Carolina, were able to work together to design an insurance program that leveraged risk analysis and risk-modeling technology and packaged, as a risk-retention group, a new insurance program that offers the sophisticated analysis to profile individual insurance policyholders and offer discounted rates for AMA members, Hegwood said.

Indigo also worked closely with AMA Insurance to make sure their coverage aligned with AMA policy and advocacy efforts. For instance, the application removes questions pertaining to past diagnosis of a mental illness or substance-use disorder and requires the physician’s consent to settle any potential litigation.

Policies are issued by Indigo Risk Retention Group LLC, which is rated “A- (Excellent)” by A.M. Best, an insurance industry ratings service.

The insurer offers more than usual robust coverage and includes:

  • Prior-acts coverage for related claims.
  • Tech-enabled, streamlined account and claims-management system.
  • Physician-centric defense with experienced claims attorneys.
  • Free extended tail (claims history) coverage that continues insurance when a policyholder retires.
  • Additional, limited coverages such as patient support, professional licenses management, personal injury coverage and others.

In addition, AMA members get a 5% discount, up to $400 per year. The goal is for the offering to be available in all 50 states by the fall of next year.

Learn more about the AMA Insurance medical professional liability insurance plan.

New tech means customized pricing

“We’re thrilled to introduce this new program to physicians,” said AMA Insurance President Pam Moy. “Physicians deserve access to best-in-class technology that better identifies risk and rewards them with more customized pricing. This more nuanced and accurate assessment often leads to better rates.”

Indigo's proprietary technology leverages new data and advanced technology to predict physician liability more accurately, Hegwood said.

“Customized pricing means physicians will pay in line with their true risk profile,” not generalized premiums charged without a formal risk analysis, he noted.

Hegwood added that the new insurer and policy terms are perfect for physicians in a hardening insurance market in which premiums are likely to continue rising based on total industry claims levels—not individual claims volume, making policyholders subject to increases based on generalized claims costs.

The program provides a new insurance coverage outlet for many individual physicians and their practices, he said.

Jared Kaplan, co-founder and CEO of Indigo added that the company is “privileged to work closely with AMA Insurance as we launch the next generation of medical professional liability insurance. We look forward to offering physicians an alternative for their medical professional liability insurance that harnesses advanced analytics to bring better pricing and lower costs.”

The 2023 edition of “Medical Liability Reform NOW!” (PDF) gives physicians the facts they need to address the broken medical liability system, including updates on state laws, innovative reforms, efforts to reform the system at the federal level, and high-impact court cases at the federal and state levels.