Medical Professional Liability Insurance
Last Updated 11/12/2014

Medical professional liability insurance, sometimes known as medical malpractice insurance, is one type of professional liability insurance. Professional liability refers to liability that arises from a failure to use due care and the standard of care expected from a person in a particular profession, in this case a doctor, dentist, nurse, hospital or other health-related organization.

A medical professional liability insurance policy covers bodily injury or property damage as well as liability for personal injury such as mental anguish. The complexity involved in discovering negligence results in a higher percentage of premium dollars going toward defense and cost containment expenses. Medical liability insurers spend substantial funds investigating and defending claims where there is an adverse patient outcome not resulting from negligence.

Many insurers write on a claims-made form basis where a policy in effect at the time a claim is reported responds for the loss, regardless of when the error was made. The policy that was more popular in earlier times is occurrence-made which covers a loss that occurred during the policy period, regardless of when the claim was made.

The medical professional liability insurance market has occasionally experienced times of crisis, such as during the late 1990s, leading to high prices for policyholders. These times were marked by volatile changes in premium, declines in investments, rapidly increasing loss ratios as a result of increases in claims payments and defense and cost containment expenses, and the development of a large reserve deficiency. The NAIC publishes a report (Countrywide Summary of Medical Malpractice Insurance) that shows loss ratios were very high in the late 1990s, peaking in 2001. Loss ratios have since declined in recent years and prices have fallen.

Insurance regulators have evaluated the availability and affordability of medical professional liability insurance in the past, such as in the 2004 Report titled “Medical Malpractice Insurance Report: A Study of Market Conditions and Potential Solutions to the Recent Crisis.”

In order to better understand claims associated with medical professional liability insurance, some states require closed claims to be reported to the state insurance department. In 2010, a “Guideline for Implementation of Medical Professional Liability Closed Claim Reporting” was adopted by NAIC membership which made recommendations for implementing the NAIC Medical Professional Liability Closed Claim Reporting Model Law.


Committees Active on This Topic

Property and Casualty Insurance (C) Committee

Affordable Care Act Medical Professional Liability (C) Working Group
Additional Resources
NAIC Research and Actuarial Department: Data at a Glance: Medical Professional Liability Insurance
July 2013, CIPR Newsletter
NAIC Medical Malpractice Insurance Report: A Study of Market Conditions and Potential Solutions to the Current Crisis
September 12, 2004
Cover Memo for the Medical Malpractice Insurance Report
October 24, 2004
Countrywide Summary of Medical Malpractice Insurance

Aaron Brandenburg
Statistical Information Manager

Sara Robben
Statistical Advisor

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