The Road Ahead: MPL 2024

With 2024 well underway, the MPL industry continues to trend upward due to fewer staffing challenges, members’ strong balance sheets, and overall improved returns. Although it is now on firmer ground with covid in the rearview mirror and ongoing reinvestment, is its clean bill of health sustainable? Join us as host Jiffy Thomas, Sapiens’ Vice President, Professional Services and special guest Brian Atchinson, President and CEO of the MPL Association, examine how today’s MPL market has bounced back from its 2023 lows and how it can continue its positive trajectory.

Jiffy Thomas|Brian Atchinson

Jiffy Thomas: Hello! Welcome to the Sapiens Insurance 360 podcast. I’m your host, Jiffy Thomas, Vice President of Professional Services here at Sapiens North America. I’m so glad that you’re out there listening. This is where we discuss the latest news, trends, and issues from across the insurance solution and technology spectrum.

2024 has just begun, and the outlook for the medical professional liability industry continues to improve, given better rate adequacy, the diminishing impact of pandemic-related exposures, higher reinvestment rates, and improved overall returns. Although the industry continues to weather varying market cycles despite tort reform challenges, it still faces other specific challenges such as persistent economic uncertainty, rising reinsurance costs, staffing challenges, and ongoing hospital consolidation. So, what does the road ahead look like for the MPL industry? To help us answer this question, joining us today is special guest Brian Atchinson, President and CEO of the MPL Association, the national association representing the medical professional liability community. MPL Association members insure nearly 2.5 million healthcare professionals around the world and over 3,000 hospitals and 50,000 medical facilities and group practices globally.

Prior to joining the MPL Association, Brian served in various leadership roles in the industry and state government, including Maine Superintendent of Insurance and president of the National Association of Insurance Commissioners. He has authored numerous articles, testified before Congress, and served on committees of the National Academy of Sciences.

So, Brian, it’s great to have you on the show.

Brian Atchinson: Thanks, Jiffy, it’s great to be here.

Jiffy Thomas: So as I mentioned in the intro, 2024 is so far looking like somewhat of a mixed bag for the industry. 2023 itself was a packed year for MPL, due to hospital consolidation, staffing challenges, and further fallout from the Covid pandemic. Can you provide an overview and update as you see it?

Brian Atchinson: Sure. Thanks very much for the question. Well, 2024, I think continues a positive trend for the MPL industry. As I think you know, in 2023, we were still coming out, sort of the COVID aftermath and waiting for the proposed or threatened flood of claims for COVID, which never did really materialize. And we also were finding that rate adequacy was finally beginning to be something that was becoming more widespread in the marketplace for quite some time. Rates had been kept low. The marketplace had been very competitive. But 2023, certainly we continue to see consolidation of hospital providers, [and] other healthcare providers. That is not going to stop. I mean, we’re also seeing consolidation amongst physician group practices around the country that certainly impacts some of the MPL carriers that have traditionally focused on physicians. I would say that one of the things that has improved in 2023 and continues into 2024 are issues regarding staffing challenges.

While they’re certainly not solved entirely, people may recall in 2022 things were pretty desperate, both in healthcare, staffing and insurance company staffing, and just staffing of just about every type and variety. That seems to have abated and things continue to seem to solidify as we move into 2024. And that’s certainly a positive in terms of being able to manage an organization or deliver healthcare without having to deal with a lot of APS, empty positions, or having to pay exorbitant prices for temporary staff. So so in that regard, I think that 2024 looks to continue a sort of a positive trajectory for the MPL industry. And we’re excited about that.

Jiffy Thomas: Thanks for that. And Brian, a lot of uncertainty, especially the positive outlook in in the pandemic-related impact rate. So a lot going on. And let’s pivot a little bit on the liability premiums themselves. A protracted period of upward volatility in medical liability premiums has continued into a fourth consecutive year this year, and suggests an ongoing hard insurance market, making it difficult for physicians to find affordable coverage. What are your thoughts on that, Brian?

Brian Atchinson: Well, certainly we’re seeing some evolution of what’s going on with premiums, but on one hand, there is a sense that premiums are moving back more toward the indicated level based on, you know, actuarial determination. For a number of years, the MPL marketplace has been very, very competitive, with a number of carriers in the position marketplace and other carriers and other parts of the healthcare liability market competing for business. Good for, good for consumers, good for customers. But the, the former insurance regulator in me is always a little concerned if rates are not maintaining a level of adequacy because, you know, ultimately the most effective form of consumer protection from the regulatory perspective used to be ensuring that the companies were solvent and collecting enough rates. Now, I will say that almost all the companies in the MPL market at this point, certainly within our membership, are very financially strong, very, very healthy balance sheets, good asset surplus levels. And so no real concerns there. But certainly, we are seeing rates stabilizing and firming up. But again, it’s been very competitive for a long time and the traditional definition of a hard market, is that healthcare providers are not able to either find coverage or afford coverage. And we’re, I would say we’re not really quite there yet.

There may be some isolated areas in the United States, certain states, parts of certain states where there may be challenges for finding adequate coverage or affordable coverage. But at this point, it’s still relatively competitive out there. So I think if you’re a clinician or a facility and you’re going into the marketplace and looking for coverage, most everywhere you’re able to find that coverage. It may be costing more now, but that’s the nature of of an insurance market and in the cycles of insurance. So, you know, I think people should still feel pretty good about where the market is at this point, now that rates are firming up. But there is a lot of competition out there.

Jiffy Thomas: Interesting, Brian. So somewhat connected with the premiums is a topic that keeps coming up, the MPL tort reforms. Have tort reforms continued to affect the MPL market and particularly premiums?

Brian Atchinson: Absolutely. You know, a number of states have passed tort reforms going back over 10, 20, 30 years in recognition that in order to maintain a healthy number of doctors and nurses and hospitals and clinics in a state or in a community, the laws need to be fair and balanced. And so a lot of states recognize that over the decades and put in place, what are often referred to as tort reforms to ensure that these are fair and balanced systems with predictability and to eliminate bad outcomes when they’re not warranted.

And over the last 3 to 5 years, we’ve seen a steady, a steady chipping away at tort reforms in many, many states. You know, in some states, they’ve been turned overturned. In other states they’ve been diluted. We’re seeing a very coordinated effort throughout the United States by various interests to try to reduce the liability protections for those who provide healthcare or, you know, it’s not always just state laws. I mean, we’re seeing a lot of changes taking place in how judicial systems work, how the the court system, the various terms of administrative process and rules of procedure can also be very impactful negatively. You know, Pennsylvania’s a glaring example of where a state’s regarding standing to bring a claim were dramatically changed, to go back to the way things were 25 years ago. And just in one year, the number of claims that have been filed for medical liability against clinicians has dramatically increased in some of the more plaintiff-friendly communities such as Philadelphia, Pittsburgh, and others. Now, this you know, this doesn’t just happen for no reason. It’s because, historically there, the juries and the jury and the members of the judiciary in those areas have not been particularly supportive of the interests of those delivering medical care.

And, in fact, it’s not just tort reforms that we’re worried about. The MPL association, its major initiative for the past three years has been coordinating and organizing work on public policy throughout the states, working with all of our members to coordinate and collaborate to ensure that there is fair and impartial information presented in legislative venues and other public policy venues to ensure that the laws and rules of procedures remain fair and balanced. So that clinicians and healthcare organizations and institutions will be treated fairly in the courts and in the entire claims process.

So we are very concerned about tort reforms because they’re trending in the wrong direction, in far too many states. And we’re devoting a lot of time and energy to try to do what we can to continue to advance and defend the interests of those providing medical care and the companies ensuring them.

Jiffy Thomas: Great, thanks, Brian. A very complicated and complex situation that ultimately people are striving for the quality of care. So I’m sure tort reform is going to be a continued topic and we’ll be continuing to hear and track it over the next 12 months. So now switching gears and looking back to last year, AM Best has revised its outlook and moved from negative to stable, and they’re citing improved conditions such as rate adequacy, higher reinvestment rates, and improved, overall returns. Do you think these positive trends will continue into 2024? Is there anything else the industry faces in 2024?

Brian Atchinson: I do think these positive indicators and trends will continue in 2024. I mean, I also think that it’s been a fascinating process to watch and observe and engage with our friends at AM Best as to their view of the MPL marketplace. You know, they had identified a number of concerns, a number of what some call headwinds going back, four or five or six years ago. And many of those were legitimate concerns. I mean, I think when COVID arrived in 2020, I mean, a lot of people in both in the industry, outside of the industry, and the finance world and the insurance world, healthcare world, were anticipating that there was going to be an avalanche of claims brought against those who provided medical care and treatment or [were] responsible for diagnosing, as well as those in the insurance side, on the MPL side.

But the reality was, while there are certainly some claims, there was never an avalanche. I mean, the preponderance of claims that did get filed were mostly focused on the long-term care of the nursing home community. And I think that its well-established, and, as someone said not too long ago, it’s not surprising with the benefit of hindsight, that there was not the avalanche of claims because MPL claims are usually directed when there is a belief that there may not have been the appropriate standards of care followed in the delivery of care and treatment. And in this case, we’re talking about a pandemic, for which there was no known appropriate care and treatment. So it’s been gratifying in that regard, to see that there has not been an avalanche of claims and lawsuits. But as we look forward, I mean, a lot of the other headwinds have also abated. I mean, there have been grave concerns going for five years now about interest rates that, there many [who] believed, there was an inevitability, a tremendous increase in interest rates potentially going back as high as they were in the early 1980s when interest rates got to 15%, 18%. And while they certainly did go up a bit over the last couple of years, they also they also did not stay that high, for very long. And so in terms of both the cost of claims impacted by interest rates, the impact on investments, I mean, it’s been not nearly what some had concerns about in terms of the impact on insurance companies, particularly the MPL space.

So we think the positive trends that started to manifest themselves in 2023 will continue in 2024, you know, concerns about staffing, they are not what they were in 2022 and early 2023. There will continue to be consolidation in the healthcare space. But, you know, I think people are going into these things wiser now, more careful. I think, you know, there started to be some interesting observations about the impact of private equity in the delivery of healthcare. You know, there was a recent piece in the New England Journal of Medicine, which is quite insightful. So, you know, I think I think people are going to move a little more slowly to make sure things are going a little more predictably. And I think that’s generally good. That’s good for consumers, for clinicians, for insurance organizations. You know, I think overall, we’re hopefully moving toward a continued stable environment in 2024 and beyond. But of course, having said that, is almost like tempting fate, because it seems like every time you think things have settled down and uncertainty has abated, something will come out of left field, sort of the Black Swan event that will change our understanding of what the future holds for us.

So don’t ever assume, but I think the MPL industry is right now in a pretty good place. And so fingers crossed and we go forward. Thank you.

Jiffy Thomas: Thank you. Great advice and great insights. Thank you so very much, Brian. You’ve given me and our listeners so much to think about, and I’m sure we’ll keep hearing about these issues in the context of the MPL industry for many more months to come. Thank you so much for joining us on the program. To our listeners, as always, thank you so much for spending time with us today. We love hearing from you, so if you have comments or would like to follow us on social media, please reach out to us on our channels and don’t forget to subscribe to the podcast. And thank you once again for listening. We have more coming, so please be sure to tune in next time to Sapiens Insurance 360.