Fifteen years into the soft market cycle, it shouldn’t come as a surprise that the Medical Professional Liability (MPL) market is turning around. Many will remember that the Long-Term Care (LTC) market began to show signs of hardening in 2017, and the Hospital segment began to follow suit in the second quarter of 2019. While the Facilities and Physician segments have lagged behind, they’re also turning the corner toward a firmer market. While the COVID-19 pandemic is to blame for many current challenges, this hard market was well on its way prior to the pandemic. In actuality, the battle against COVID-19 has functioned in many ways as a temporary pause button for the MPL marketplace, giving insureds a short period of respite due to moratoriums on litigation. However, significant market changes are anticipated for the remainder of the year and beyond. Understanding the 5 primary drivers of the tightening market can be important to helping clients comprehend the changes that are coming.
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Fifteen years into the soft market cycle, it shouldn’t come as a surprise that the Medical Professional Liability (MPL) market is turning around. Many will remember that the Long-Term Care (LTC) market began to show signs of hardening in 2017, and the Hospital segment began to follow suit in the second quarter of 2019. While the Facilities and Physician segments have lagged behind, they’re also turning the corner toward a firmer market. While the COVID-19 pandemic is to blame for many current challenges, this hard market was well on its way prior to the pandemic. In actuality, the battle against COVID-19 has functioned in many ways as a temporary pause button for the MPL marketplace, giving insureds a short period of respite due to moratoriums on litigation. However, significant market changes are anticipated for the remainder of the year and beyond. Understanding the 5 primary drivers of the tightening market can be important to helping clients comprehend the changes that are coming.
Subscribe to CRC Group on Youtube
Subscribe to Tools & Intel (email newsletter)
Read Past Tools & Intel Articles
Follow CRC Group on LinkedIn
Featuring:
Visit REDYIndex.com for critical pricing analysis and a snapshot of the marketplace.
Do you want to take your career to the next level? Join #TeamCRC to get access to best-in-class tools, data, exclusive programs, and more! Send your resume to resumes@crcgroup.com today!
There's been a lot of talk about the hardening medical professional liability market. Of course COVID 19 has had an effect on things, but there's a whole lot more to the NPL market than that. Today we sit down with CRC group healthcare specialists to find out what we know, what we don't know. And most importantly, what lies ahead in NPL?
This is the placing you first podcast. I'm Dan Wentz and this podcast features news and insights from CRCs. Vast knowledge base of 2000 plus associates who write nexus of $8 billion in premium annually. And we're giving you insider access to what's happening in our company and the types of insurance we play.
This is the placing you first podcast. Okay. So we're joined now by rusty Hughes, senior broker in the CRC Birmingham, Alabama office, along with Tyler O'Connor, who is also in Birmingham, Alabama force, and Tom Levin from Chicago. Uh, they are all specialists in healthcare and, uh, work with assistant and senior living industries as well.
Facilities, uh, you guys, uh, when we were putting this podcast together, uh, you know, mentioned that COVID, everybody's just about COVID it out by now, right? So we're going to talk a little bit more about general health care and what's going on right now and generally what is happening in the marketplace.
And I think rusty, you said. Where's the pain. You want to answer that question? Right? So where's the pain. Tell us about it. Where, where is the place? I mean, I think we were talking a little bit earlier. We all predicted this, right? We were sitting around last year. About this time. We said, you know, we're probably going to have a hard market.
And then on top of that, I predict that and we all predicted that there was going to be a, a worldwide pandemic thrown in the mix. So nothing really, nothing really shocking about that. For any of us, we were all prepared and ready to roll. The market was prepared. he's got that. You could have planned on that one though.
I come in, they come in threes, right? So, you gotta have a little fun with it. Who, who. So circle back on the obvious joke is who could have predicted where we are today. No one in their right mind, could predict that we would be dealing with an already heightened pricing, environment all across, the healthcare lines.
No doubt, coupled with the worldwide pandemic and on top of that. The political unrest that we're all seeing on the news. So, those three things in itself, provide enough unknown to make this market even more difficult than anyone ever dreamed. Yes. So what do you guys know right now? I mean, what are the things that you actually, you know, can determine?
I know there's a lot of stuff up in the air, you know, I would say that. When it comes to pain back to your original question, it's kind of like when you were a little kid and you went to the doctor's office and they ask you, you know, how bad does it hurt from one to 10? And all of our clients, in the healthcare arena are feeling some sort of pain.
Whether, you know, on a scale of one it's, it's a physician's malpractice that seeing some sort of nominal rate increase. to the senior living operator who is seeing their limits cut, their premiums triple and quadruple, and their terms tightened and everywhere in between. what do we know now here in the middle?
Tobar that we, we didn't know in March and April. It's a really good question. We know that there's still a lot of unknown. I think if you would have, have asked any of us back in the spring time, when are you going to have a handle on all this? By this time, by the fourth quarter, we would have said, we're going to have, you know, the pandemics going to be in the rear view mirror.
we're going to have a really good field for what litigation is going to look like. And, we're going to get back to our normal, normal way of doing business. Well, that's not the case. The pandemic is stuck around, given the long tail nature of litigation in healthcare, we still really have seen very few actual lawsuits filed.
and so it's still a big question Mark, of, of what that's gonna look like. and we're, we've got a lot of big question marks is where we're starting to work on our end of year and beginning of 2021 business. Yeah, Tom. I agree. I mean, I do think that when we first began talking in March and April and may and working through renewals in the healthcare market at the time, I do think that by October, we had probably expected to see some litigation that was going to hell.
pave some precedent or at least allow us to feel out, alongside, you know, our carrier partners, you know, exactly what's going to be important. How, how drastic and how impactful this is going to be, because obviously the marketplace took a very concerted effort early on to box out coverage from this or that.
And, it was consistent in some market segments, such as senior care and less consistent in other market segments, such as allied health and physicians and hospitals, and even human services that are not residential. So, you know, by October, I think that we, we did expect to probably know more than we do today.
Unfortunately, obviously. You know, several months worth of renewals in the midst of this. And you know, one thing I would add is I think that the pain is evident everywhere. I think it's being felt in every aspect of the insurance cycle. you know, felt no more though than, you know, then the client themselves.
I mean, you know, you see businesses repurposing themselves, obviously, you know, insurance have had to manage a situation where they've just simply been trying to stay in business. Obviously you wholesalers, you know, we send pain in a different way. I think we have to be really, really careful in the way that we, portray that pain, versus other people.
pain that they're feeling, but retailers definitely are having certain challenges. our underwriters who, you know, I remind myself and others. I mean, our underwriters are not philanthropists. You know, they have, they have a job to do here. And, you know, the way that they are showing, the business being applied on a renewal basis, you know, it does come from somewhere.
and so I think that everyone in the life cycle of an insurance policy right now, you know, is, is facing challenges, which, you know, show pain and feel pain in different ways, unfortunately. But, you know, I had hoped that we would all it. No more today in terms of the actual litigation, you know, here in October.
And I know there's been a few test cases and they will talk about that too, but yeah. So what are we going to know more? What do you, how long do you guys think? I mean, is there any, any indications that you're seeing that, you know, I hate to get into territory of speculation, but you know, how long is this going to go on?
Is there a brighter future? I think so. I think what will happen? Just an opinion here. we all have those opinions on the markets, but I think what we will see happen is that as we move through what I call the COVID exclusionary season, by that, I mean, for the most part carriers started excluding COVID on or around.
One of 2020. So we still have a pretty good road ahead for clients to, as they renew or move coverage to continue dropping COVID incident reports or COVID claims on the markets that we're not otherwise excluding it until. June one of 2020. So I think as we get to the middle of next year and these carriers have a full annual look of what they have on their books with regard to COVID like the known about just the gravity and yeah.
And the sheer number that the market's going to be faced with with regard to just incidences of COVID that have to be handled. I think only then when we see markets kind of take a deep breath and go, okay, we know what we're sitting on. We've probably seen, claims come, people being represented by attorneys more at that point.
And so I think we're probably not in a position to even guess until we get that settled down period of June one next year. But I do think what will happen is that you will see, many of our clients, well, all of our clients should that many of our clients. Sort of start rushing to that report, frenzy let's get everything that we know that even looks like smells like, feels like COVID will be reported.
and so I think real early to kind of make, an educated guess really one of the, one of the mitigating factors will be immunities, various state immunities. Are we going to see immunity at a federal level? you know, many, many States have enacted some iteration of immunity. We have questions as to whether they're going to stand up how strong they are.
I do think, come the middle of November and December, we'll probably see some more at a state level. that would probably be the quickest way to get COVID to calm down in terms of the insurance landscape. but we'll see if, if, and when that actually happens. Well, one thing that I'm worried about, you know, particularly as it relates to senior care.
And I know, you know, that was kind of the front lines. So you were saying, coverage restricted and a lot of worry on the, on the onsite concept of this is in order to avoid immunity or to skirt that in some way, people are going to have to prove certain levels of intentionality. Criminal behavior, willful negligence immediate is the things that we hear, right.
And these are the things that we've seen even in Massachusetts where they're filing criminal suits against, you know, an operator and individuals and what that's going to do, consequentially. It would be very interesting to see how it, how it is, net, by the system. And, and how that. Eventually litigate itself out.
But I think along the way, it's going to drag the industry back into the mud because one of the things that's going to win, it's going to do is it's going to naturally make all of these cases about, you know, profit over price and willful negligence. And it's going to imply that every operator facing this lawsuit is a bad person.
and I think that that's something that, you know, a consequence that we should go ahead and prepare for from a public relations standpoint. And I think that the insurance industry, you know, this is a, this is a generational issue. And I, I do think, you know, maybe we make the leap at some point in this conversation about the role of insurance and what it can do, at this time.
But I do think that particularly as it relates to the senior care industry, In order to skate to skirt or to even fight, you know, the immediate challenge. It's unfortunately gonna bring some lawsuits in a very, very negative light just to provide a couple of real world examples. two things that I've seen personally been involved with two lawsuits already.
not to belabor the point, but just to give it just to give a real life insurance market example, two of the larger claims regarding COVID that I've personally been involved with, have both claimed a failure to prepare. And also one of the major things around it was failure to communicate afterwards, properly with the families.
and how, just how great the situation may or may not have been in that particular facility. And both of those have been petitioned to be moved into federal court to Tom's point. It's all going to be very interesting me. Interesting. You know, I think we're all starting to see some examples. We've got an interesting claim going.
That's actually been brought against one of our hospitals. it was a surgical claim. The allegation is failure to properly perform surgery that led to the patient having to do a rehab, stay in a nursing home. where that patient contracted COVID and ultimately passed away. So that claim for, for COVID being contracted in the nursing home, it's coming back against the hospital.
Who's the deep pocket in this situation. it, it feels like a bit of a stretch, but it's going to be interesting to see how it plays out. You know, I think for now, all we can do is rely on our carriers to have faith in, faith, in their insureds and faith in their claims, people that they're going to be able to defend.
Defensible insureds out there and to try to pinpoint and exclude the matters that they really want to, you know, right now we're talking about just broad, broad rush, you know, the exclusions and, you know, being packaged with other exclusions that we're seeing in the marketplace also as if the hard market wasn't happening, then that pandemic happened.
And it's as if. You know, while everyone was so focused on, whether or not there would be coverage or what type of event or litigation might come in from a COVID standpoint, you know, has, has those two things coincided. we began to see some, some coverage make its way back onto policy forums. That was incredibly restrictive.
You know, you take basic, you know, class action type exclusions for non-interested parties. And all of a sudden now that gets broadened, in a sense, and you know, brokers and, and agents and policy holders. Are faced with or are accepting coverage that is, you know, far worse than, than just a COVID exclusion.
We started just talking about COVID. Now we're talking about the exclusions in the marketplace are far broader, so whatever comes next is also preemptively excluded. So that's a great point. So I would say so now we've talked about how, how COVID brought us to where we are and. Sort of strengthened the already hardening market and all the other factors that are at play.
So let's put COVID over in the corner for a little while, and let's just, let's focus on the three of us. We're in it. We're doing it every day. W I mean, if I look down the road six months from where I sit right now, I see, I really do see a worsening market, but talk about where my pain points that I see.
We're talk about pain. So in kicking off the conversation is I don't think I've ever experienced. I think everyone sort of predicted that the primary markets were going to react to a hard market like they have, and we've kind of been prepared for that. Prepare our clients. They were prepared for it. They prepared their insureds.
But I think that if you talk about what this overall market has done from an excess perspective, it's the most difficult part of the market that we were all in day in, day out. Never, never. Never experienced the inability to, to feel safe that I could, fulfill a client's excess needs. Let me think. I think excess in healthcare is probably one of the largest pain points that, that I can think of.
You want to get a retail ever fire it up, you start asking them how their access markets are going and in, you know, it's completely justified. I mean, it's, it's really, really frustrating, incredibly frustrating. And I know that, you know, underwriters, underwriters, you know, are coming from a different perspective.
I understand that, but the I'll just be honest. I mean, the arbitrary nature of the way that X is being applied is confusing and frustrating. And, you know, you feel somewhat powerless capacities. One thing pricing, you know, just is kind of another, you know, and I do think that there's a lot of frustration, at, uh, within our, our agency partners.
Just in the sense of having to come up with an explanation to how this. how this excess is working from last year to this year, or even from 10 or 15 years ago. Hey, I mean, but you know, or even as recent as four, six months ago, I mean, it just, it really comes across, as, uh, Confusing, particularly to a buyer.
And I think that the pain being felt there is more frustrating than other places, because I think that a retail agency teams and our wholesalers can point to specific metrics, specific trends, specific carrier exits coverage restrictions for why primary, policies are doing what they're doing. I think that's one thing.
I think that the inability to maintain a certain level of insurance. Or to pay more for far less is a, is a, is a far different, conversation to be had. And I think that our industry has got to do a better job of trying to articulate through numbers. exactly why some of these excess cases are coming in the way they are.
I mean, if I could get on college game day right now, if they were allowing people to get on college game day, I would build a big cardboard sign that said need access. Yeah, man, it's amazing. Absolutely. And no one would know what you're talking about, except for 1% people that listen to this podcast, maybe a couple of, A couple of weeks ago, I was having a conversation with one of my retail partners and he said, I thought your markets were ENS markets.
And I said, well, they are. And he said, no, They're the S part, but they're forgetting about the excess and surplus. And in a lot of ways, he was right. You know, for 10 years is to Tyler's point. You know, carriers have been asking us for access more new entrance into that space. And it's just been a, a one 80 pivot, in it's in all lines, within healthcare.
And that dovetails with the casualty space like casualties, seeing hardening and excess and umbrella. Probably worse than healthcare is, but it's in senior care and the hospital space limits are getting cut. Attachments are moving up. the medical facility space is much less excess capacity than there was.
And I would say, the human services side of the house might be the single toughest placement for access right now. as we're seeing a lot of the historical. standard or admitted markets that we're putting up primary and Umbro limits trim those there's a lot of times where we go into the marketplace and they, the answer is just, there is no capacity available.
so we're, we hope, is there's the calendar flips into 2021 that we're going to start to see some more carriers move into that space. but for now it's buckle up and expect a bumpy ride when you're in that world to Rusty's earlier point of put COVID in the corner. Our issues with excess right now, have nothing to do with COVID.
That may be a convenient excuse, or the, the topic of the day, but the, the issues in both the primary and excess, the loss development we're seeing is from before any of us had really even considered the term pandemic for many, many years. so it's, it's not the problems we're seeing in the market today are not solely COVID related.
There's a lot of other factors that are playing in. I don't disagree. I mean, I think there's a couple of things too. I mean, the market moves so fast and hardened in such a quick fashion, within the first two quarters of the year or two that we saw, capacity tapped out. With certain markets, several waves you used had written and stopped writing business by may and June, you know, and human services and other healthcare classes.
And so COVID, isn't necessarily, a factor on the ground. But I do think that it was a factor up in the air as those decisions get made and get, get pressed down. Think obviously it's limiting, the amount of capacity that we do have on an excess basis on the ground, even if it's not directly tied to COVID in the way that it's spoken to us, but a lot of access to, you know, is kind of take it or leave it if I'm offering XDS.
And you're two days out for renewal. And I come in with a number and you don't balk and you tell me to firm it up. Yeah. Then people are applying exclusions at that time. I mean, it's a completely ransomed, type situation. you know, the seller's market is what it is effectively and COVID exclusions are present in a lot of healthcare classes where they're not even deserved or an excess basis.
Rusty and Tyler with me being here up in the Midwest, you know, most of my agents are, are. Our regional up here. I'm curious how your retail brokers are doing, how are their attitude, how are their spirits, what kind of challenges are they facing and what are they doing to, help their clients get through a difficult for the most part?
I think that that retailers are still very frustrated. The ones that I've talked to are very frustrated and the reason why is because they're frustrated in a good way. I mean, they're, they're optimistic in that they know that there's. Light at the end of the tunnel, so to speak. But as you know, one of the symptoms of a hard market is the speed to market and the speed to which we get terms.
Even though we tell clients way ahead of time, how bad they're going to be, inevitably something clogs the pipe. And you're sitting there a week, week and a half out and you're delivering bad news or they knew it was coming, but the old, you know, late bad news is worse than bad news is a thing that we're having to deal with.
But I think that the retail brokers and we try to have this conversation with them all the time. It's gods. We we know that the evolution of any hard market when we're, we're still kind of at the top of the Hill right now, maybe not quite there, but we know that at some point there's going to be a day where we're able to walk back into a client's office and provide them that day of relief and say, you know what, we've finally gotten you to a five to 10% increase.
so I think particularly folks that have experienced. A hard market like this. I think they can really look their clients in the eyes and say, Hey guys, remember. A bit, we've been here before we've done this. and I do think, or at least my clients tell me this is that they feel comfortable in working with CRC and particularly in the healthcare space, because they know that we've been very careful with selecting our partnerships the right way and not just slinging in business to any market walking that they can tell their class we're with the right people.
We're with the right markets. and, and so long-term, we're going to be able to come back to you and provide relief. So I think anytime you can look at a situation and know that down the road, there's going to be an easier time. This is not the perpetuity. Listen. I mean, people, You know, in terms of adversity will, soak or hide or run from it.
And there, you know, certain people that will stand up and, and, you know, Al performance shine in it. And it's a, it's a really easy thing to fall into this. You know, the market is terrible. Things are bad. You know, it's bad news at every turn and, and that's, that's just, that's the fact of the matter, that's the reality that we are in, but it is an opportunity market make no mistake, not an opportunity to make more money that may be, you know, a symptom of it, but an opportunity to really fulfill yourself as an insurance counselor or, you know, the whatever role we perform.
I mean, it's an opportunity to do that. Better now, and to outperform, that's the metric that I talk about with, with my partners in our team, which is, you know, our job is to outperform. It's bad for everybody. It's tough, but what we feel in terms of adversity, you know, the person behind us, the agency partner behind us is feeling adversity in a heightened way.
And the person behind them, the client that they're advocating for, that they are consulting with and informing and shepherding in certain ways is feeling adversity in a far heightened way than I am. And so I think keeping a grip on reality, staying positive. In the midst of bad news, bad news, bad news. I mean, I think that, you know, when we do that and we seek to outperform and we take our eyes off, we're just winning the deal even, you know, but to outperform for the agent who is trying to maintain the relationship and outperform for the client, he's trying literally to take care of people and to stay in business.
You know, that's the role that we play. And I feel that we've outperformed in 2020, because we've taken that type of practical attitude towards it, you know, and whatever comes in the fourth quarter, it's going to be hard. We're going to lose deals. Our agents are going to lose deals and clients are going to go out of business.
And so that's going to happen, but we can, we can really, I think, thrive in the moment, maintain our agency. Partners really deepen our relationships with our carers. As you said, rusty. I mean, that is, that is so vital for us and where we get a lot of energy. Isn't supporting partners and making fair deals for our underwriters.
You know, and, I think that is a goal of ours and, you know, in that way, I really sincerely look forward to the challenge in the fourth quarter. Tom, I'd like to add one more thing to that in tolerance, the word that sticks out to me in what you said or is outperform thing. That's what we do. I think that's what we do every day.
I think that doesn't just happen by chance because we spend a lot of time learning our craft. making sure that our clients know that we're keeping our finger on the pulse of the market and that what we're bringing to them is the absolute best of the market will allow. So I think the number, one thing that our agents them to trust us is to when we bring you a solution to an account, to an insurance issue, whatever it might be when we bring you the solution.
You have to trust. They have to trust that when we tell them this is the best that the market will allow given whatever situation it is, that that is fact that that's truth that we've done. The work we've put in the hours we put in the homework, we've educated ourselves, our teams, everyone around us. the underwriters know it.
The underwriters know that that, that it's hard to throw us a curve ball. It's hard to say, here you go. We're just going to give you this deal and see if, see if it will stick. Well. Chances are that we've vetted that out. So I would say the number one thing that we bring to the table, I think that gives our producers.
Competence is, is we know concretely that the deals we're bringing to the table, our market best got to have confidence. No, I appreciate the insight guys. I think our retailers up here are feeling a lot of the same. And, you know, one thing that we've seen over the last several months is, our good quality retail brokers, as Tyler said, the cream rises to the top.
and not only are they stepping up and helping their, their own clients, they're getting a lot of new referral opportunities. there's, uh, as we talked about earlier, there's a lot of pain points out there. And so. A good number of our retailers. And in a year that's very difficult to prospect on new business.
the quality brokers out there are seeing good quality new submissions to work on. So hopefully that'll be a trend that continues through the fourth quarter and into next year. Great. Well, rusty Tyler, Tom, thank you so much for joining us today. We really appreciate it. And of course, if you want to find out some more information about these guys or, uh, our healthcare practice group or exec pro practice group, you can find that all out at our website.
It's CRC group.com. Thanks a lot, guys. We'll talk to you next time. .