AM Best: US Medical Professional Liability Premium Growth Slows Further

Why It Matters

The shift forces MPL insurers to prioritize investment performance and rate adjustments, while heightened social inflation and pending tort‑reform legislation amplify risk for healthcare providers and investors.

Key Takeaways

• Underwriting losses rose to $712 million in 2025, up from $546 million
• Premium growth slowed as competition limited rate‑increase opportunities
• Investment income doubled since 2021, offsetting underwriting deficits
• Reserve releases fell to $155 million, reducing profitability boost
• Hospital premiums dropped 7%, while other providers grew 5.7% in 2025

Summary

AM Best’s latest audio briefing details the US medical professional liability (MPL) market’s deteriorating underwriting results, highlighting a $712 million loss in 2025—up from $546 million the prior year—and a slowdown in premium growth.

The widening loss stems from rising claim severity, social inflation and higher loss‑adjustment expenses, while policyholder dividends remained flat. Investment income more than doubled since 2021, becoming the primary profit source, and reserve releases shrank to $155 million, offering only modest underwriting relief.

Associate directors Vicky Riggs and Connor Brock noted that physicians still command over $5 billion in premiums, though their share is falling as hospitals gain ground. Hospital premiums fell 7% to roughly $2 billion, whereas other health‑care professionals saw a 5.7% rise, topping $1 billion. They also cited over 50 state‑level tort‑reform bills targeting third‑party funding and non‑economic damage caps, adding regulatory uncertainty.

For MPL carriers, the data underscores a reliance on investment returns to offset negative underwriting margins and the urgency of pricing discipline amid competitive pressures. Persistent social‑inflation trends and uneven tort‑reform progress suggest continued volatility for insurers, providers and investors.

Original Description

A new Best's Market Segment report discussed by AM Best Associate Directors Connor Brach and Vicky Riggs, finds that MPL insurers have generated an underwriting loss in each of the past five years, reflecting slippage in rate adequacy and increased loss severity.