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COVID-19 and Its Potential Impact on Medical Malpractice


David Huss - Mar 11, 2020

Cast your mind back to just a few short weeks ago …

After a very long softening market cycle, insurance companies writing healthcare professional liability insurance started the year only just beginning to respond to the increasing financial pain resulting from long-depressed premiums and steadily worsening claim experience. Challenges, including a shrinking core customer base, social inflation, rising reinsurance rates, a very challenging investment environment and continued stiff competition were clearly going to make navigating through the firming market trend a very difficult job.

Well, the novel coronavirus just made things a bit tougher. Now that COVID-19 has shown up in the U.S., it has the potential to hit healthcare professional liability markets hard just when they are collectively at their weakest.

According to a Centers for Disease Control and Prevention website publication, an average of about 28.5 million people in the U.S. were infected by the seasonal flu virus annually between 2010 and 2019. Of those who contracted the flu, it is estimated that an average of about 450,000, or close to 1.6% of those infected, required hospitalization. The average number of deaths annually in the U.S. related to the flu during the 2010’s are estimated to be about 37,500, or about .132% of those infected.

As sobering as the statistics pertaining to the common flu in the U.S. are, they pale in comparison to the potential outcome of a COVID-19 outbreak. According to an article dated March 5th on the ScienceAlert website, The World Health Organization has concluded the death rate associated with the COVID-19 virus is about 3.4% – close to 26 times higher than morbidity rates from the average flu virus. That means if 28.5 million people become infected with the COVID-19 virus, the result could be something close to 975,000 deaths.

Consider, too, the potential number of people who may require hospitalization in the event of a COVID-19 outbreak. As of the date of this article, there is no credible predictive data pertaining to hospitalization rates associated with the COVID-19 virus, but it seems reasonable to assume that the increase in the hospitalization rate would be something along the lines of the increase in the death rate (a multiple of about 26). Applying that same multiplier to the hospitalization rate of the common flu, if 28.5 million people were infected with the COVID-19 virus in the U.S. we could expect more than 11.5 million people to need hospitalization. To put that in perspective, there are only about 925,000 staffed hospital beds in the U.S. today. Even if the actual hospitalization rate ends up being significantly less than that, our nation’s hospitals and healthcare providers could be completely overwhelmed by the sheer numbers of people needing in-patient care.

So, as a result of COVID-19, the potential threat to insurance companies writing healthcare professional liability insurance in the U.S. starts to become clear. If medical facilities become inundated with COVID-19-infected patients who need medical attention, strained operations and overworked/exhausted providers could result in an enormous increase of new medical malpractice claims.

The difficulty of navigating through the firming market trend for med-mal writers in the U.S. may have just increased exponentially.

Here at Ethos Insurance Partners, we’re keeping just as close an eye on the COVID-19 situation as anyone in the healthcare professional liability insurance space. Know that we will continue to monitor the financial strength of the companies we access as well as changing appetites and coverages related to the spread of this new virus.

Ethos Insights:

  • The med-mal market began 2020 in an already strained state.
  • The unknown coming trajectory of COVID-19 infection, hospitalization and mortality rates leaves unanswered questions regarding the impact the virus will have on the healthcare industry and the med-mal industry that helps protect it.
  • Ethos will continue to monitor the impact of the COVID-19 virus on the medical malpractice arena.

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