Medical Liability Monitor 2013 Annual Rate Survey Indicates Continued Soft Market, Revenue Outpaces Claims Expenses

According to just-released data from the 2013 Medical Liability Monitor Annual Rate Survey, the medical professional liability insurance industry has experienced yet another year where rates and written premium continue to trend downward, while insurers continue to achieve above-average financial results. This is a familiar scenario, as rates have been declining since 2006, but year after year the industry as a whole continues to post impressive financial performances.

“While it’s not surprising that this year’s Annual Rate Survey indicates the continuation of a multi-year downward trend in rates and written-premium, it’s still confounding,” said Michael Matray, editor of the Medical Liability Monitor. “The medical professional liability insurance industry has been slogging through the longest soft market in its history, and there’s no solid indication as to when that’s going to change.”

“Since 2006, the U.S. medical professional liability insurance sector has seen direct written premium fall by roughly 20 percent, suggesting a soft market,” said Chad Karls, author of the Executive Summary to this year’s Annual Rate Survey. “At the same time this traditional soft market indicator has been in free-fall, however, the industry’s premium revenue has continued to outpace its claims expenses, with annual combined ratios for the sector coming in at well below 100 percent every year since 2006. To put this record into historical perspective, consider that for the 28 years between 1978 and 2005, the sector enjoyed a combined ratio under 100 percent only twice, once in 1989 and once again in 1994. To put this sector’s recent financial results into a current perspective, all other property and casualty lines of insurance had combined ratios of 100 percent, or well above, in 2012. Only medical professional liability managed an underwriting profit last year.”

Similar to the last seven years, this year’s Annual Rate Survey finds the majority of rates remained flat (57.6 percent of all rates did not change). Rate declines significantly outnumbered, and were generally more severe, than rate increases this year—as 28.8 percent of all manual rates decreased in 2013, a 3.1 percent rise from last year, while 13.7 percent were increases, slightly lower than last year’s 15.1 percent.

On a regional basis, the Northeast was once again the only area of the U.S. to see an average increase in rates, but at 0.7 percent, it was lower than last year’s 1.19 percent. New York led the pack in the Northeast this year with a 4.8 percent rise in rates, followed by New Hampshire, which had shown the second highest increase in 2012, with a rise in rates of 4.2 percent.

At 3.6 percent, the Midwest once again experienced the largest average rate decrease (the region had an almost identical 3.5 percent drop last year) and was once again the most volatile region. Only three states (Iowa, Minnesota and Missouri) showed no average change up or down in rates. North Dakota and Nebraska, as noted above, had the steepest declines at 12.2 and 10 percent, respectively. Michigan took third place with a 5.1 percent drop, followed by Wisconsin and Indiana at 4.2 percent each. South Dakota’s rates fell 3.35 percent, with the remaining states all coming in with rate declines less than two percent: Illinois (1.6 percent), Kansas (1.2 percent) and Ohio (1.6 percent). No state in the Midwest region showed an average rate increase over 2012.

The medical professional liability insurance industry faces a number of issues that will continue to impact the market over the next several years. No one knows exactly how reforms in the Patient Protection & Affordable Care Act will affect the number of independent physicians as well as claims frequency, but for now, medical professional liability continues to be the most profitable segment of the property and casualty insurance segment despite a soft market with no definitive end in sight.

To order a copy of the 2013 Annual Rate Survey or subscribe to the monthly Medical Liability Monitor, please click here.


Medical Liability Monitor is the only independent publication reporting exclusively on the medical professional liability insurance and risk management industries. The monthly newsletter, founded in 1975, has conducted the Annual Rate Survey since 1991. To order the Annual Rate Survey or to subscribe to the monthly newsletter, visit or call 312-944-7900.


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