E&S insurers are stepping into the healthcare liability gap - using real-time data to underwrite risks traditional carriers now avoid. From senior living centers to hybrid outpatient models, these nontraditional facilities face rising liability exposure just as standard markets retreat.
According to TransRe, there were 57 medical malpractice verdicts exceeding $10 million in 2023. That number is expected to remain high in 2024, with projections ranging from $49 million to $52 million as final figures are tallied.
But excess and surplus (E&S) carriers, freed from state rate filings, are stepping in. Their advantage: flexible underwriting powered by data analytics that assess each facility’s unique risk profile, legal environment, and claims history.
Michael Walder (pictured), vice president of healthcare programs at Nationwide, said this adaptability is critical in a sector under strain.
“We’re crafting policies around evolving risks,” he said, pointing to early collaboration with providers as key to preventing costly litigation. “E&S insurers are known for specialized expertise, innovation and flexibility to respond quickly to market changes.”
That responsiveness is especially valuable for complex or unconventional healthcare operations that don’t fit the traditional insurance mold. Still, even E&S carriers face growing pressure from social inflation and a legal landscape increasingly defined by high-dollar jury awards.
“You could call it litigation abuse,” Walder said, “or an uptick in what I would describe as large jury awards.”
As risks grow more complex, E&S carriers are leaning further into data analytics to guide their decisions. “E&S carriers are leaning … into data analytics,” Walder said. “It plays a crucial role when it comes to underwriting these evolving risks.”
Unlike traditional actuarial approaches, advanced analytics give carriers a dynamic view of exposure by combining real-time claims data with insights tailored to individual facilities and the legal environments in which they operate. This allows for more accurate pricing and enables underwriting of risks that standard markets may refuse.
“Data analytics really enables us to assess the risk profile, pricing, and really tailor policies for individual risks,” Walder added, “and, frankly, foster effective claim resolution.”
Malpractice liability is one of the clearest areas where E&S carriers are stepping in, particularly in high-risk specialties such as ophthalmology and pain management. Social inflation is driving an alarming increase in nuclear verdicts - jury awards exceeding $10 million - which strain both healthcare providers and the insurance system itself.
“The latest study that I’ve seen is that last year we have seen 60 nuclear verdicts in excess of $10 million for healthcare providers. When you go back 10 years, that number was down to six,” Walder noted.
As standard carriers retreat from these volatile segments, E&S carriers are responding by refining underwriting practices and offering more customized options. But coverage alone isn’t enough. Timely claim resolution and effective risk management strategies have become just as essential.
Rather than simply reacting to claims, today’s carriers are embedding support into the insurance relationship itself. They work with providers earlier in the risk lifecycle, aiming to reduce exposure before it escalates into costly litigation.
Building stronger risk management through partnership
Walder emphasized that collaboration is becoming just as important as underwriting. E&S carriers are forming more strategic partnerships with brokers and healthcare providers to create long-term sustainable solutions.
“Strategic partnerships between the carriers, brokers and, frankly, the healthcare providers are key,” he said. “Ultimately, these collaborative efforts, in my view, lead to better patient outcomes and reduce liability.”
