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Physician looks at charts to help manage rising insurance costs.

Managing Rising Costs and Coverage Changes

Costs are rising at home and at work. How can you manage the costs and benefits of your malpractice coverage?

If you’ve bought groceries lately, you know costs are rising for nearly everything. Insurance coverage costs are not exempt. Insurance carriers of all lines of coverage are experiencing what is called a “hard market.” This means costs are rising and, to remain stable, profitable, and be available to protect policyholders for the long term, the cost of insurance must also rise. It has been more than 15 years since the last hard market.

One of the most significant hard markets occurred in the 1970s. Rates were increasing, and carriers were forced to leave the market. This led to a significant crisis of both affordability and accessibility. That event is the reason why most states require (at a minimum) a $1,000,000/$3,000,000 policy limit. Fortunately, in today’s market, the chance of lost accessibility is less likely.

An insurance hard market occurs when premiums increase, and an insurer’s capacity is decreased. This occurs for many reasons, but there are a a few specific culprits.

Three Predominant Factors

Demonetization of the dollar

This is when the value of a dollar does not go as far as, or represent, what it used to. Inflation, recession, and the rising cost of everyday items all contribute to demonetization of the dollar. The average medical malpractice claim cost has increased by 50% since 2009.

Social Inflation

When the public hears of these large awards, they begin to accept large verdict awards as "normal." This is called social inflation. There has been a 4% increase in the number of million-dollar-plus claims paid since 2014 (March 27, JAMA Internal Medicine).

General Distrust

A third factor is a generational distrust of public companies such as insurance carriers. Couple these factors with the realization that health care providers have often had a negative association, and you have a perfect storm.

What You Can Do

What can you do in this market to manage the potential rising costs or coverage changes with your professional liability coverage?

Stay current on trends

Our risk management team continues to stay current with new trends. Our website has many free resources that can help you mitigate potential claims. We also provide various risk management opportunities that may offer premium credits. Our claims team is here to help guide you through most situations.

Don’t delay when it’s time to renew

When renewal applications are requested, complete and return the information as soon as possible to be sure you are properly covering your risks. The worst-case scenario is to be practicing outside your coverage and have a claim alleged against you.

We will continue to provide solutions to help you protect and grow your practice by delivering a higher level of expertise from our underwriters to our claims staff. We are tireless in our efforts to continue to be your reliable and financially stable carrier. We are a team you can count on.