Medical professional liability insurance will be impacted by health care reform, creating great challenges and the risk of unprofitability, notes a new report from Conning Research, Hartford, Conn.

The report, "Medical Professional Liability in a Changing Health Care Environment: The New Story Unfolds," notes that increased competition will also impact the sector, and combined with reforms, will affect growth and profitability. 

"The medical professional liability insurance industry is headed for lower profits and slower top-line growth," said Jeffrey Thompson, analyst at Conning Research. "This has been a highly cyclical line of business, and cyclical conditions are continuing. Two forces may drive this line of insurance back into unprofitable waters-competition and an increase in loss costs. Competition has begun already, with price-cutting, acquisitions, new entrants, and continued growth of self-insured vehicles. Loss cost growth has been slower to develop, but we believe a number of conditions are aligning for this to take off."

The report analyzes the impact of national health reform on an already stressed medical operating environment. It also looks at opportunities from these changes, including recommendations for new risk management practices and services, changes in the pricing model, product development, and prospects for new markets to emerge, notes Conning.

"The delivery of health care is changing and this will change the way medical professional liability insurers view and manage risk, defend claims, manage data, price policies, choose markets, and expand," said Stephan Christiansen, director of research at Conning. "While we see a deteriorating environment for medical professional liability, tools do exist for better-informed companies to drive future performance apart from industry results. No insurer is immune from market forces, yet the degree to which they can insulate themselves is likely greater than they believe."

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