2026 MARKET TRENDS

Healthcare

Medical Malpractice and Dental

Key Takeaways

Prepare for tightening in the excess and umbrella segment, marked by reduced capacity and higher premiums for complex risks
A top underwriting concern, underwriters are scrutinizing sexual misconduct and abuse claims, reducing capacity and making coverage harder to secure as the frequency of severe claims increases
Social inflation and a plaintiff-friendly legal environment are driving higher medical malpractice settlements, with verdicts over $10 million more than doubling since 2015
Consolidation, staffing shortages and the integration of AI continue to reshape risk profiles and operational strategies across the healthcare sector
Conditions have become more favorable in the healthcare property segment, marked by improved capacity and rates trending downward

The healthcare industry is navigating a period of significant transformation, marked by financial pressures, regulatory shifts and technological advancements.

Overview

The healthcare industry is navigating a period of significant transformation, marked by financial pressures, regulatory shifts and technological advancements. Key trends shaping the insurance landscape include the persistent rise of sexual misconduct and abuse claims, which remain a top underwriting concern, leading to full tower limit losses. A more plaintiff-friendly legal environment and social inflation are driving an increase in nuclear verdicts, with the number of verdicts exceeding $10 million more than doubling since 2015.1

Although staffing shortages have improved since the pandemic, they continue to challenge the sector, especially for senior living organizations. Consolidation remains a global theme as organizations seek efficiency and market power. Meanwhile, the integration of AI is expanding, augmenting human capabilities from administration to patient care.Healthcare organizations are also preparing for potential changes in federal legislation that could impact reimbursement and research funding.

1 Marathon Strategies. Corporate Verdicts Go Thermonuclear, 2023.

Market Conditions

The professional liability market for healthcare providers and organizations market is experiencing significant underwriting adjustments and capacity shifts, creating a challenging environment for buyers. Carriers are tightening terms and scrutinizing risks more closely, particularly for high-exposure areas. Markets are actively reducing their excess and umbrella capacity for hospitals and health systems, making it difficult to secure significant limits. This hardening is also apparent in the long-term care sector, where umbrella carriers are increasingly reluctant to include automobile liability as an underlying coverage.

Underwriters are placing intense focus on specific risk factors. Sexual abuse and molestation (SAM/SML) coverage is now subject to thorough underwriting, with markets restricting capacity, requiring detailed assessments, increasing retentions or adding coinsurance and exclusions. For cyber liability, carriers prioritize an organization's loss history, risk management practices and vendor security protocols; those with strong controls receive more favorable terms. Additionally, underwriters continue to evaluate an insured's financial stability to help ensure they can meet their retention and deductible obligations.

Conditions vary across different lines of coverage:

Property and Casualty

The property and casualty market is hardening, particularly for excess and umbrella liability. Markets are reducing capacity and raising premiums, making it difficult for hospitals and health systems to secure significant excess limits. This trend particularly affects long-term care facilities, where umbrella carriers show reluctance to include automobile liability as underlying coverage. After several challenging years in the healthcare property insurance market, conditions have become more favorable. Capacity has improved significantly; rates are trending downward, and many carriers are expanding their appetite for new business.

Medical Professional Liability and Dental

This market is relatively stable, depending on the state/territory, with most customers seeing modest single-digit rate increases. However, more litigious jurisdictions are experiencing higher rate hikes as carriers act deliberately on pricing. Allied healthcare providers continue to grow significantly, having doubled in size between 2012 and 2023. With the increase in providers, some of whom work independently, we could see a rise in the frequency and severity of medical malpractice claims for these professionals.

Rate Outlook

Healthcare organizations should budget for rate changes across several lines of coverage. The following forecasts provide projected rate adjustments for various lines of coverage in the upcoming year:

Impacts & Considerations

Emerging risks and market dynamics demand proactive risk management. To navigate this environment, healthcare providers should consider the following strategies:

Begin the renewal process well in advance to address any unexpected challenges and to thoroughly review market options

Be ready for additional data requests from underwriters, particularly concerning SAM/SML exposures and pixel tracking protocols

Implement robust patient safety/risk management programs

Develop comprehensive safeguards, including security assessments to promote a safer environment for patients and employees

Maintain clear and consistent documentation of staffing levels, training protocols, patient care guidelines and risk management programs

For senior care facilities, clearly defining the scope of care for residents and their families can help manage expectations and mitigate liability

Identify and get pre-approval from underwriters for preferred law firms and vendors to avoid delays when a claim occurs

Consider overlooked risks, such as pollution liability, which carries exposures related to legionella and mold in healthcare facilities

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Brown & Brown, Inc. and all its affiliates, do not provide legal, regulatory, tax guidance and/or advice. If legal advice, counsel or representation is needed, the services of a legal professional should be sought. The information in this document is intended to provide a general overview of the topics and services contained herein. Brown & Brown, Inc. and all its affiliates make no representation or warranty as to the accuracy or completeness of the document and undertakes no obligation to update or revise the document based upon new information or future changes.