Medical professional liability insurance (MPLI) is a smaller specialty property/casualty insurance underwriting segment that has generated strong annual underwriting profits since 2006, considerably outpacing other major commercial lines. However, there are questions regarding the sustainability of this performance as MPLI industry aggregate results continue to show declining premium volume, while at the same time accident-year loss ratios have increased by 30 points over the last seven years from previous very profitable levels. Executive Summary With 30 points of deterioration in accident-year loss ratios occurring over the last seven years for the MPLI segment, Fitch’s Jame Auden and Gerald Glombicki ask whether strong profitability in the line is sustainable.
MPLI is lagging behind the broader commercial lines market in shifting towards higher premium rates in response to weakening results. Competitive factors specific to MPLI reduce the likelihood of a near term market turn. As such, underwriting results are likely to deteriorate further in MPLI over the near term before any pricing improvement materializes.