Best’s Market Segment Report: Challenges Persist for the U.S. Medical Professional Liability Market; Insurers Focus on Pricing, Risk Management

OLDWICK, N.J.--(BUSINESS WIRE)--Pressured in part by rising claims severity and social inflation, the U.S. medical professional liability (MPL) segment reported another year of increased underwriting losses as direct premium growth slowed, according to a new AM Best report.

The Best’s Market Segment Report, “Challenges Persist for the MPL Market; Insurers Focus on Pricing Integrity and Strategic Risk Management,” notes a collective underwriting loss of $712 million in 2025 from insurers that primarily write MPL business, compared with a $546 million loss reported in 2024. Direct premiums written by those MPL specialist insurers increased 3.6% to $9.4 billion last year, continuing an upward trend.

“The premium growth in 2025 was generally below expectations, reflecting competitive forces impacting carriers pushing for higher rate increases amid rising claims severity and rising competition,” said Vicky Riggs, associate director, AM Best. “We also noticed increasing levels of net investment income providing cover for companies that reported underwriting losses, as most still managed to report overall positive pretax and net income.”

According to the report, the MPL composite produced its second consecutive year of pretax earnings above $1 billion due to continued strong net investment income. However, a lower amount of realized capital gains was cited as the primary reason for a 22% decline in this segment’s net income, which totaled $1.6 billion last year.

The MPL composite’s calendar year results have benefited from consistently favorable prior-year reserve development, albeit with less magnitude in more recent periods. While sizable reserve redundancies in excess of $1 billion were recognized in earlier years, such as 2015–2017, the impact has been much more muted lately. In 2025, the MPL composite reported a modest $155 million of favorable development. “We expect the property/casualty industry to report small reserve deficiencies for the MPL line in the near term, as social inflation takes its toll on claim frequency, severity, and both reporting and settlement patterns,” said Connor Brach, associate director, AM Best.

The AM Best report also includes a state-level breakdown of medical liability tort reform laws, noting that while some states have enacted these measures, others have resisted reforms entirely, placing considerable pressure on the operating performance of MPL insurers in those states.

To access the full copy of this report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=364657.

AM Best will host a complimentary analytical briefing on the state of the U.S. medical professional liability (MPL) insurance sector on Thursday, May 7, 2025, at 2 p.m. (EDT). To register for the briefing, click here.

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