Hamilton, Bermuda (2 December, 2014) – Losses above $5m in the US healthcare insurance sector are accounting for a rising proportion of total dollars spent in claims, according to specialist healthcare insurer Hiscox. In the early 2000s the percentage of total dollars spent in claims for losses of $5m and over was in the 7.5%-10% range per year; that figure has moved up in to the 15%-25% range, and is expected to go higher still.
The continuing incidence of the healthcare super loss – losses above $50m – is also having a clear impact on this trend with 50% of the largest medical malpractice claims paid in history coming in the past five years.
Commenting on the research, Justin Keith, Vice President, Hiscox, said: “This increase in the proportion of dollars spent in claims on losses above $5m for medical malpractice is a worrying trend for US healthcare. And we know that 2014 is shaping up to make the figures look even worse.
“US healthcare reform is having both a positive and negative impact on these costs. On the plus side, we’re seeing better risk management, improved patient safety programs and a seemingly positive effect of Accountable Care Organizations on quality, all while claims handling has become much better. And we are also seeing many positives coming from the significant investments in resources and talent.
“On the flip side however there is significant disruption generated by an increased number of healthcare facilities’ mergers and acquisitions, accompanied by a fundamental shift in the business of delivering healthcare and a squeeze on margins. When it comes to litigation, the affects of all of this change on jury pools remains uncertain at best, but as community hospitals start looking more like big business it's no surprise juries appear to be handing out larger awards."
“Some recent market losses however have come from high quality facilities which, even though they can demonstrate excellent leadership, risk management and in-house claims teams, proves that big medical malpractice claims can strike anyone at anytime. It sounds a warning to those insurers who simply see medical malpractice as a profitable makeweight to their other lines of business.”
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Rise of the super loss: recent awards |
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Date |
State |
Award |
|
|
2010 |
New York |
$60.9m |
Negligence at birth |
|
2010 |
California |
$670m |
Inadequate staffing at assisted-living facilities |
|
2010 |
Florida |
$114m |
Wrongful death suit against a nursing home |
|
2011 |
Connecticut |
$58.6m |
Negligence at birth |
|
2011 |
West Virginia |
$91.5m |
Nursing home negligence |
|
2011 |
Michigan |
$144m |
Negligence at birth |
|
2012 2012 2013 |
Florida Delaware Maryland |
$168m $123m $190m |
Brain damage following surgery Child abuse Patient privacy violations |
Ends
For further information please contact:
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Kylie O’Connor |
0044 (0)20 7448 6656 |
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Sebastian St John Clarke |
0044 (0) 7779 702191 |
Notes to editors
Hiscox, the international specialist insurer, is headquartered in Bermuda and listed on the London Stock Exchange (LSE:HSX). There are three main underwriting divisions in the Group - Hiscox London Market, Hiscox Re and Hiscox Retail, which includes Hiscox UK and Europe, Hiscox Guernsey, Hiscox USA and subsidiary brand, DirectAsia. Hiscox underwrites internationally traded, bigger ticket business and reinsurance through Hiscox Re and Hiscox London Market. Through its retail businesses in the UK, Europe and the US Hiscox offers a range of specialist insurance for professionals and business customers, as well as homeowners.
For further information visit www.hiscoxgroup.com
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