Medical liability insurance premiums continue to march upward.
Rates have been on the rise for sixth year in a row and almost every part of the country is seeing rates increase, with some pockets of the country harder hit than others.
Three big concerns, according to a newly published AMA Policy Research Perspectives report (PDF):
- The proportion of reported liability insurance premiums that rose from one year to the next hit 49.8% in 2024. By contrast, that figure stood at just 13.7% in 2018 and hovered around 15% in the three years prior to that.
- Among the 50 states and Washington, D.C., 46 reported at least one premium increase last year. That’s up from 36 that did so in 2023, 38 in 2022 and 32 in 2021.
- 16 states saw at least one premium increase of 10% or more, up from 11 states in 2023, 15 states in 2022 and 12 states in 2021.
“The increase in premium has become more widespread, something that hasn’t happened since the last hard market in the early 2000s,” said Allen Hardiman, PhD, the AMA’s senior economist and author of the new report.
Actuaries haven’t declared that the nation is experiencing a hard medical liability insurance market. However, “there are signs that such conditions may become a reality in the near future,” the AMA report says.
Medical liability reforms are essential to ensuring that patients do not lose access to physicians and a full range of health care services and the AMA is committed to keeping medical liability insurance premiums stable through its work with state and specialty medical associations and other stakeholders to pursue traditional and innovative medical liability reforms.
The most recent 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.
Pockets of concern
The average premium increase nationwide was 2.5% between 2023 and 2024, up from 1.9% from 2020 to 2021. While that may not look like a large increase, data shows that pockets of the nation are experiencing notable premium increases.
In 2023, 11 states saw at least one premium increase of 10% or more. Last year, by contrast, 16 states saw at least one premium increase of 10% or more. Here are those 16 states, along with the share of premiums that saw increases of more than 10%:
- Hawaii—50%.
- Pennsylvania—49%.
- Montana—33.3%.
- Oklahoma—33.3%.
- Nebraska—33.3%.
- Indiana—27.8%.
- Missouri—22.2%.
- Kentucky—20%.
- Florida—19%.
- Idaho—16.7%
- New Mexico—16.7%.
- Illinois—12.9%.
- New York—11.6%.
- Oregon—11.1%.
- New Jersey—5.6%.
- Michigan—4%.
“Among these states, Pennsylvania, Oklahoma, Nebraska, Missouri, Illinois and New Jersey each had at least one premium with an increase of at least 10% from 2022 to 2023 as well,” the AMA report says. “This indicates that these states underwent a notable surge in premium across two consecutive years. Furthermore, an analysis of prior years’ premium data reveals that Missouri and Illinois have suffered considerable premium spikes since 2020.”
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Will a hard market emerge?
The share of premiums that rose in 2024—just under 50%—is still below the increases seen in the medical liability insurance hard market of the early 2000s. In 2003, 77.4% of premiums rose when compared to the previous year; in 2004, that number was 82.1%.
It’s unknown whether the upward trajectory being seen now will continue, the AMA report says, noting that “if the trend continues, it could negatively impact patients’ access to care due to a reduction in physician supply.”
A stable medical liability insurance market began in 2007 and tort reforms were key in stabilizing premiums in the hard market. However, courts have overturned some of those state reforms. The AMA report highlights “clear geographical variation in medical liability premiums, as insurers determine their rates on the aggregate claims experience in a particular area, which can be influenced by state tort reforms such as caps on non-economic damages.”
The AMA report uses new data published annually in Medical Liability Monitor, considered the most comprehensive source of data on medical liability insurance premiums from a national perspective.
Medical Liability Monitor annually surveys major U.S. liability insurers and reports manual premiums for obstetrics and gynecology, general surgery and internal medicine in each state where those insurers provide coverage.
The data directly compares how many premiums rose, fell or stayed the same from one year to the next and is a useful indicator of whether premiums in the aggregate have been changing, in which direction and by how much. The data doesn’t reflect all insurers or all physician specialties and are for manual premiums, which could be different than the final premiums physicians pay.
