MPL Sector Faces 10th Year of Underwriting Losses Amid Rising Verdicts

The US medical professional liability (MPL) insurance sector reported its 10th consecutive year of underwriting losses in 2024, despite an increase in overall net income, according to a new report from AM Best. The composite's underwriting loss widened to $586 million in 2024, up from $395 million the year before, driven by growth in loss and loss adjustment expenses (LAE) that outpaced premium growth. 

The Best's Market Segment Report, "Medical Professional Liability Underwriting Results Pressured by Evolving and Complex Landscape," attributes the worsening underwriting results to rising claims severity, exacerbated by nuclear verdicts and the weakening of state tort reforms. Economic damages are increasing even in states with caps on noneconomic damages. 

"Social inflation, life care plans, jury anchoring, and litigation financing are often cited as contributing to the rise in excess verdicts, and jury attitudes are also trending in favor of larger damages awards for plaintiffs," David Blades, associate director, industry research and analytics at AM Best, said.  "As social inflation persists and results in higher ultimate incurred indemnity losses, underwriting results may be impacted further if pricing doesn't keep up." 

The MPL sector saw a 155 percent year-over-year increase in net income in 2024, reaching $2.1 billion, driven largely by an 8.7 percent rise in pretax operating income to $1.1 billion. This improvement was fueled by strong investment returns and significant capital gains that more than offset underwriting challenges. 

AM Best found that most rated MPL insurers maintain strong capital positions, solid cash flow, and robust risk management strategies. The report emphasizes that in the post-pandemic era, the complexity of healthcare delivery is accelerating transformation in the MPL space. Insurers are investing in innovation and data-driven services to support insured practitioners. 

"While MPL insurance has historically been a slow-moving, compliance-heavy space—that is changing quickly," Sharon Marks, director at AM Best, said. "Rather than just selling protection, current MPL players are becoming strategic partners—leveraging artificial intelligence, real-time data, and external partnerships to deliver more proactive, bespoke solutions. The future of MPL insurance is not just about tinkering with legacy business models; it's about constructing a whole new foundation." 

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