AM Best Report: Robust MPL Segment Despite Moderated Growth

The latest report from AM Best reveals that despite moderated premium growth of 3.6 percent in 2023, the financial performance of the medical professional liability (MPL) composite remained robust, thanks to favorable net investment income. This growth comes on the heels of price firming in response to soft market conditions and industry challenges that had previously suppressed demand.

The newly released Best's Market Segment Report on the US MPL segment highlights that improved underwriting results stalled last year, partly due to escalating loss adjustment and other underwriting expenses. MPL insurers confront familiar obstacles, including the potential escalation of claims costs due to social inflation, erosion of tort reforms, and the increasing complexity of medical care. Additionally, challenges such as rising burnout rates, staffing shortages, and the expansion of alternative care providers could have a negative impact on claims frequency.

Sharon Marks, director at AM Best, emphasized, "These headwinds, coupled with changes in tort reform, social inflation, and continued rising claims severity, could impede the segment's progress."

She continued, "But these issues are also expected to help focus and maintain the MPL segment's attention on premium adequacy, underwriting discipline, and prudent reserving."

AM Best revised its outlook on the US MPL insurance segment from negative to stable in November 2023. This revision reflects improved rate adequacy, reduced pandemic-related impacts, persistently redundant loss reserves, higher reinvestment rates, and improved overall returns.

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