“The new entity is likely to buy less insurance than what the sum of the two previously independent entities used to buy,” said Andy Shapiro, senior vice president and healthcare segment leader for Chicago-based CNA Insurance Cos. “I think it's affected the whole marketplace.”
CNA, No. 5 on the Modern Healthcare ranking with 4.9% market share, saw a 3.1% increase in direct premiums written to $477 million in 2013 from $463 million in 2012. It was the only carrier in the top five to see an increase.
The largest carrier, Omaha, Neb.-based Berkshire Hathaway Insurance Group, had an 8.5% market share but saw its business go down 1.7%, falling to just under $826 million in direct premiums written in 2013 from almost $840 million in 2012. Others in the top five were: Doctors Company Insurance Group, Napa, Calif., with a 7.6% market share and a 7.3% drop in DPW; Medical Liability Mutual Insurance Co., New York, with a 5.6% market share and a 3% drop in DPW; and ProAssurance Insurance Group, Birmingham, Ala., with a 5.1% market share and 5.1% drop in DPW.
Another factor in the decline is that more providers are taking the self-insurance route, Shapiro and other experts agree.
ISMIE Mutual Insurance Co., a Chicago-based carrier covering 12,000 physicians and founded by the Illinois State Medical Society, was ranked No. 10 with a 2.5% market share and a 7.5% drop in DPW. Its chairman, Dr. Harold Jensen, noted another contributing factor, namely that carriers are experiencing a challenging market.
“Fierce competition between companies writing MPL [medical professional liability] policies and the trend toward hospitals and national practice-management firms buying medical practices make top-line growth very difficult for every MPL carrier,” Jensen said. “While we write policies in one of the most competitive markets in the nation, we remain confident of our market leadership.”
Brian Atchinson, president of the Rockville, Md.-based trade group PIAA (formerly Physician Insurers Association of America) said the downward trend is also an indicator of a soft market that has resulted in lower prices over the past eight years.
“In general, there is less opportunity for organic growth in the current MPL market. This is due to a reduction in number of the policyholders available because of the employment trend for physicians,” Atchinson said.
But he added that, while the physician-employment trend is cutting business, there were other insurer opportunities—and hazards.
“It is worth noting that the increased roles and responsibilities of allied healthcare professionals throughout our nation's healthcare system could be an opportunity for market-share expansion,” Atchinson said. “Also, given that we are seeing more care delivered in ambulatory settings, there may be growth in these areas as well. Of course, along with these opportunities comes increased liability as well.”
New laws and regulations can have unintended consequences that may affect the legal climate, he said.
“The concern is that many of the provisions intended for reimbursement and payment or reporting on patient satisfaction and outcomes could open up new avenues of liability,” Atchinson said. “PIAA has taken a leadership role in promoting the Standard of Care Protection Act—a bill to clarify that federal healthcare reimbursement guidelines and other new reporting provisions cannot be interpreted to create new standards of care that can be used in MPL lawsuits.”
Dr. John Jennings, president of the 58,000-member American College of Obstetricians and Gynecologists, said he believes liability claims are going down, in part, because of new reimbursement formulas that emphasize value and quality.
“I think some of that factors in,” Jennings said, adding that consolidation also has put doctors in a stronger position to negotiate. Jennings said he's also noticed a drop in high-dollar claims.
“If we reduce some of those, that reduces the need for higher premiums,” he noted.
In ACOG's 11th member survey on professional liability (PDF) completed in 2012, the 9,006 survey respondents reported being part of 2,564 obstetric and 1,496 gynecologic claims. Also, 51.1% of the respondents said they changed their practice over affordability or availability of insurance, while 57.9% said they did so as the result of the risk or fear of liability claims or litigation.
In response to fear of claims or litigation, 27.4% of respondents reduced their number of high-risk obstetric patients, 23.8% reported increasing the number of cesarean deliveries they performed, and 6.2% stopped practicing obstetrics.
Also, out of fear of litigation or claims, 18.9% said they decreased the amount of gynecological surgeries they performed, 6.7% stopped performing “major” gynecological surgery, and 1.8% stopped doing surgical procedures altogether.
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