Social inflation worries healthcare insurers

The healthcare insurance industry might need an overhaul in its public relations to change the way that jurors view it at a time of increasing social inflation and legal settlements.

That was one of the conclusions of a panel on the impact of social inflation on captives & others in the healthcare system at the Cayman Captive Forum.

The panel was composed of Edward Rand, president and chief executive, ProAssurance, Bill Burns, vice president, research & analytics, MPL Association, Holly Meidl, senior vice president & chief risk officer, Ascension

Social inflation is real, Burns said, and the industry needs to find a way of managing it, with the trend in large verdicts for medical malpractice suits rising substantially since 2019.

The panel pointed out that ordinary insurers are trying to manage what it on their books, but that as captives have to, due to their very nature, hold certain risks on their books this makes it harder for them.

The panel agreed that US culture has changed, with the definition of what is reasonable changing, accelerated by COVID-19. Due to the rise in factors like conspiracy theories, the social part of social inflation has changed, due to less respect for healthcare workers. This has led to something of a breakdown in the relationships between patients and doctors and increased the chances of patients who think that they have been misdiagnosed or not treated properly suing their physicians.

The panel also discussed a change in the metric for what is the right value for something – there has been a change in expectation of what value people place on other people’s treatment, along with a growing lack of trust in science.

This has resulted in the rise of the concept that someone should pay, no matter what the facts are, as well as a lack of understanding of the role that insurance plays in US society. People see insurers announcing large profits and conclude that insurance companies can afford large verdict settlements because they have the money, the panel said.

The panel debated the general mood around large settlements, with some arguing that there’s anger out there, others classifying it more as frustration, along with fear.

The panel agreed that insurers could and perhaps should pool information more to help with defence strategies and address some of the common tactics being used by aggressive plaintiffs.

It was also argued that if quality is delivered in terms of treatment and other healthcare issues then this might start to change the general attitude towards litigation.

It was also concluded that a public relations overhaul required on the part of healthcare insurers and other providers and question was asked if the industry is afraid of speaking up too loudly against high settlements?

The panel also agreed that there are no easy answers on this topic.