Analysis by specialist insurer Beazley shows that the average cost of a medical malpractice claim in the U.S. has risen by 50% over the last decade, with a steep increase in the number of claims of above $5 million since 2015.
Beazley, a specialist insurer that operates in the U.S. hospital professional liability (HPL) sector, has published the findings of a recent study in a collaborative article on the HPL insurance space with re/insurance broker Aon.
Beazley’s U.S. hospital claims data finds that ultimately, medical malpractice is more costly, driven in part by a steep rise in the largest claims.
The article is based on data from Aon’s hospital and physician professional liability claims database and also Beazley’s database of over 850,000 unique professional liability claims, which represents almost 50% of all U.S. hospital beds.
Large claims, which are defined as larger than $5 million, now make up a larger portion of all claims than in previous years. Between 2015 – 2018, large claims were 1.9% of total claims versus 1.2% in the period 2011 – 2014.
“The average paid claim with indemnity closing in 2018 was 6 percent higher than in 2017. While that is only a single-digit increase from year to year, the cumulative effect of similar rises has taken the average paid claim from $400,000 in 2009 – to almost $600,000 last year. That means paid claims are 50% higher than they were nine years ago.
“The percentage of the very biggest claims is up versus the previous four-year timeframe and now much greater than in the early 2000s when $5 million claims were less than one percent of all claims. We attribute this rise to a combination of aggressive plaintiff attorneys and generous jury awards.
“The double-digit million dollar claims are having a chilling effect on the medical liability community. Awards of this size drive hospitals to increase their self-insurance, can cause premiums to rise and industry capacity to decrease, so there is certainly a shared interest in seeing these rising costs stabilize,” said Valentina Minetti, U.S. hospitals focus group leader at Beazley.