CHICAGO - For the third consecutive year there has been an exceptional surge in the percentage of medical liability premiums with year-to-year increases, according to an analysis issued today by the American Medical Association (AMA). The prevalence of increases in medical liability premiums between 2019 and 2021 has not been observed in about two decades.

The AMA analysis reported that the share of medical liability premiums with year-to-year increases was somewhat stable between 2010 and 2018. The recent period of upward volatility began in 2019 when the proportion of premiums that increased was about 27%, almost double the rate from 2018. In 2020 and again in 2021, roughly 30% of premiums increased.

“The medical liability insurance cycle is in a period of increasing premiums, compounding the economic woes for medical practices that struggled during the past two years of the pandemic,” said AMA President Gerald E. Harmon, M.D. “The increase in premiums can force physicians to close their practices or drop vital services. This is detrimental to patients as higher medical costs can lead to reduced access to care.”

Twelve states reported double-digit premium increases in 2021. Illinois led all states with the largest proportion (58.9%) of premiums that increased 10% or more, followed by West Virginia (41.7%), Missouri (29.6%), Oregon (20%), South Carolina (16.7%), Idaho (11.1%), Kentucky (7.4%), Delaware (6.7%), Washington (6.7%), Michigan (5.4%) Texas (4.9%), and Georgia (3.7%). The size of the largest premium increase in these states ranged from 35.3% in Illinois to 10% in Idaho and Washington.

“Insurers started raising premiums in response to deteriorating underwriting results, lower loss reserve margins, and lower returns on investment,” according to actuaries cited by the AMA analysis. Thus, actuaries “expected that insurers would sustain or even push for higher premiums in 2021.”

The AMA analysis also found striking differences in premiums by geography. For example, in 2021 some obstetricians and gynecologists faced base premiums ranging from $49,804 in Los Angeles County, California to $215,649 in Miami-Dade County, Florida.

While the surge in upward premium changes largely coincided with the COVID-19 pandemic, the AMA analysis notes “the long-term effect of the pandemic is still unknown” and it appears base premiums have not been affected for the time being.

Together with state medical societies, the AMA is pursuing both traditional and innovative medical liability reforms to preserve premium stability and meet the needs of millions of Americans who need affordable, accessible medical care. For more information on AMA solutions to reshape the current medical liability system to better serve both physicians and patients, please read Medical Liability Reform–Now!

The newly released AMA analysis on medical liability insurance premiums is based on an annual survey of professional liability insurers conducted by the Medical Liability Monitor (MLM). The MLM reports base premiums for three specialties in each state and sub-state area where the responding insurers provide coverage.

The AMA offers medical practices a growing list of tools and resources to support physician practice sustainability. Additional details on clinical information, guides, advocacy and medical ethics are available at the AMA COVID-19 Resource Center.

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