COVID-19 is set to cause a spike in medical malpractice claims over the next 12-18 months, despite its impact having not yet been fully felt yet, according to Clare Bello, senior vice president at VCM, a division of CCMSI.
Bello was speaking at the Vermont Captive Insurance Association’s (VCIA) 2020 conference, in a session titled Captives and Unforeseen (Pandemics) Events. The pandemic has already caused a spike in workers’ compensation claims, she noted, but the impact in medical malpractice is taking longer to materialise.
“We have hospitals and other healthcare providers that are understaffed and low on revenue,” she said, noting the impact of cancelled elective surgeries on the bottom lines of many such providers. “That is a recipe for increased mistakes, not all of which will be related to COVID directly.”
Large stress events such as the current pandemic always reveal the strengths and weaknesses of commercial carriers and captives, said Steven Bauman, global programmes and captives regional director for North America at AXA XL. COVID-19 is no different, he added.
While it is easy to dwell on the problems COVID has exposed, Bauman stressed the positives, noting in particular how quickly the industry responded to the crisis, and the speed at which companies continued operating with staff working from home.
While some industries look particularly exposed - such as hospitality, restaurants and sports - panelists agreed the impact would be felt across all industries and most lines of coverage to some extent.
Bauman agreed workers’ compensation and medical malpractice look particularly exposed to a spike in claims, but warned many other lines of coverage will see a similar impact. “We are seeing it in property, business interruption and supply chains,” he said. It will take a long time before the full extent of the impact will be clear for a range of coverages, such as cyber, directors and officers and other lines. “Event cancellation is going to be off the charts,” he added.
Captives must review their claims management processes across all lines, advised Deyna Feng, director of captive programmes at Cummins.
“It is amazing how far reaching the implications of this pandemic are,” added Robert Gagliardi, senior vice president at AIG.
Meanwhile, the legal and regulatory response is also complicating efforts to remain compliant for many captives and other insurance companies, especially those that are active in multiple states.
In workers’ compensation in particular, states are changing the rules rapidly, noted Bello, for example in terms of the burden of proof placed on workers to show where they initially came into contact with the virus.
In medical malpractice the statute of limitations has been extended to account for courts being closed, which she warned will lead to claims being less spread out over time than they would usually be, which will add another challenge for captives writing this line of coverage.
COVID-19, Clare Bello, VCM, Steven Bauman, AXA XL, Deyna Feng, Cummins, Robert Gagliardi, AIG, Vermont Captive Insurance Association, VCIA