Dare we say it?! There are signs of a hardening market in healthcare.
February 2020
For those of you that have been around as long as I have, you’ve most likely experienced a “hard market.” For those of you that haven’t, you might be asking, just what is a hard market? IRMI defines it as “the upswing in a market cycle, when premiums increase and capacity for most types of insurance decreases. This can be caused by a number of factors, including falling investment returns for insurers, increases in frequency or severity of losses, and regulatory intervention deemed to be against the interests of insurers.”[1]
My definition? Underwriters underwrite more conservatively, premiums increase, and business becomes harder to place. We’ve seen it firsthand in healthcare this past year. It started in the long-term care space, with assisted living facilities being hit hard. The market firming is also spreading into allied medical and physicians.
Certain classes have become much more difficult to place as carriers no longer have an appetite for an exposure, or they have exited the class completely. OneBeacon’s renewal rights to their Managed Care and Medical Facility business was just acquired by TDC Specialty, and several Lloyd’s markets have exited this past year. Markel/Evanston has begun to non-renew their book of physicians and physician extenders. Expect those who remain in the game to tighten underwriting standards and potentially increase minimum premiums.
Some examples of hardening classes include non-emergency transport, medical staffing, correctional, and pediatric risks. Home Healthcare, although still the darling of the allied healthcare space, is being closely underwritten for the types of services provided, to whom and where those services are being offered. Hired and Non-owned Auto, once a throw-in coverage, is now being very closely reviewed for Home Healthcare and other classes.
Med Mal carriers are taking rate. Several physician carriers are taking a RATE INCREASE on their renewals and are actually taking the step factor premium increase on claims-made policies. Hard-to-place physicians are getting harder to place as carriers have exited the market by specialty, or the class as a whole. For example, a surgical podiatrist has fewer and fewer places to land in this shifting market. Combine that with a recent claim or practicing in a venue such as Florida and watch the carrier options go down and the premiums go up.
#Metoo? Look for reductions in limits for Sexual Abuse & Misconduct coverage, and the potential need for stand-alone coverage. Contractual obligations are on the rise – a Lessor requiring a higher Sexual Abuse limit has recently come across my desk. Although requirements are shifting, we can find a solution with stand-alone products.
And finally, healthcare delivery and types of care being provided is constantly evolving, as are carriers’ responses to these changes. Stem cell therapy, medical marijuana, and other alternative therapies are on the rise.
Healthcare has been operating in a soft market for years. I will leave it to the industry leaders to define whether we are on the cusp of a “hard market.” I know that we are certainly in a transitioning market; we are working harder than ever to provide our agents with the best terms possible. Whether the market is hard, soft, or transitioning, contact us for your easy and hard healthcare risk placements. We have the tools and expertise to get the job done.
About the Author
Linda Wright is the Healthcare Professional Practice Leader for Founders Professional. Linda helps long term care facilities, medical professionals, life science and social service entities across the Country secure professional liability and management liability insurance coverages in conjunction with their retail insurance agency. Linda can be reached at [email protected].
[1] https://www.irmi.com/term/insurance-definitions/hard-market