$50M+ Healthcare "Super Losses" On the Rise

Despite improved healthcare quality and patient safety measures, the cost of medical malpractice continues to climb, with juries awarding over $1 billion in damages for just seven medical liability cases in the last two years. Such is the conclusion of Bermuda-based specialty healthcare insurer Hiscox (LSE:HSX), based on research of its own claims data as well as claims data included with risk submissions.

Many healthcare institutions show only modest medical liability losses, but others are experiencing mid-sized losses that are rising, Hiscox says. It also points to more frequent catastrophic medical liability losses that can be attributed to shortcomings such as inadequate staffing in nursing homes or medical negligence in hospitals. 

Seven states in 2011 announced their largest-ever medical malpractice awards, Hiscox says, and from March 2012 to the present, seven particularly large awards have cost the healthcare industry more than $1 billion in liability losses. “While some cases have been, or will be revised down on appeal, there are clear signs that the overall trend in ‘super losses’ is upwards,” Hiscox says.

Ian Thompson, Senior Vice President, Healthcare, Hiscox, expressed concern that such “super-losses” are increasing in both frequency and severity. He pointed to cases such as an ongoing investigation into over-stenting in Maryland as just the kind of case that can ultimately become a catastrophic medical liability loss. This concern is compounded by increasing evidence that batch losses (in which insurers can place losses together under an aggregating cause) are also becoming larger and more frequent.