December 1st, 2010 by Lori Reed
The stakes are high for policymakers to make healthcare reform a success. As the changes get underway, it remains to be seen how they will affect insurers. A study conducted by Conning Research and Consulting reveals that the medical professional liability industry can expect its profit margin to shrink, as the result of more competition and tighter regulations.
Conning analyst Jeffrey Thompson says the future for medical professional liability insurance looks bleak.
“Two forces may drive this line of insurance back into unprofitable waters – competition and an increase in loss costs. Competition has begun already, with price-cutting, acquisitions, new entrants, and continued growth of self-insured vehicles,” says Thompson. “Loss cost growth has been slower to develop, but we believe a number of conditions are aligning for this to take off.”
The researchers at Conning assert insurers will have to rethink how they operate if they intend to be successful in the new age of insurance. At this point in time, only a handful of the new healthcare law provisions have been implemented. While President Barack Obama signed the Affordable Care Act earlier this year, portions of the law will not take effect until 2015.