Licensed as an insurance broker since 1981 in Florida, Matt Gracey is an expert in medical malpractice insurance coverages and leads the team at Danna-Gracey, based in Delray Beach, FL. With four decades of experience, Matt has seen it all in the Florida insurance markets. I had a chance to chat with Matt recently. Below is a lightly edited transcript of our conversation:
Before COVID, we had been discussing the hardening med mal insurance market. The alternatives like RRGs had been in decline and we were seeing ongoing consolidation in the marketplace. How has the pandemic influenced or accelerated these trends?
Courts are closed or jammed up due to the pandemic; thus, number and severity of claims is down. Despite this rates are going up. There are two proposals in the Florida legislature to shield healthcare practices from COVID litigation. Florida will probably pass a version of one these two. One of the big issues being discussed is that the “standard of care” is the benchmark in determining liability. But standards of care are not certain with COVID. This is a critical piece of the puzzle. My belief is that legislation will eventually provide relief. We are seeing stricter underwriting, non-renewals and rate increases. Insurers are no longer searching hard for new business, most are working to get high risk off the books. We have witnessed fairly dramatic price increases, sometimes two or three times on larger groups with serious claims issues. In the soft market, big groups were chased and prices charged were not actuarially sound. Insurers are now rushing to fix this. Meanwhile, some solos and small groups are facing non-renewals if they have claims and increases of 5-10% with no claims. Dividend credits for offered by the mutual and reciprocal insurers are going down, which increases the bottom line rates too. Market changes have been orderly so far but that might change once the courts get caught up on their cases.
Are there liability issues emerging around telehealth providers?
We expect some issues to emerge but it’s too early. Claims will probably arise around delayed diagnosis and misdiagnosis, which could prove to be quite common in a telehealth setting where no physical exam is possible. High tech monitoring devices will help telehealth accuracy as they become more commonplace in healthcare.
What are the liability risks associated with treatment of people infected with COVID?
Employment practice claims will be nascent. E.G. claims of improper/inadequate PPE made available to employees. Legislation being worked on is primarily focused on patient/customer protections currently, so businesses might be vulnerable to litigation from employees. The Florida legislature hopefully will pass laws to help employers on their risks too.
With providers suffering volume loss and elevated practice costs because of the pandemic, are you seeing practitioners going bare because they simply can’t afford the med mal policy?
Not yet. There is no new trend towards going bare at this point. Those with claims pending usually stay insured. Meanwhile, the rest are taking the 5-10% hit.
What about cyber policies, how fast are those rates going up? Besides phishing and hacks, what are some other trending cyber-attack methods? Has the pandemic created new cyber risks?
These rates are going up very fast. Remote working has opened up vulnerabilities. Ransomware attacks are an epidemic. Cyber policies had been priced very low but now rates are going up fast. The insurers are getting more sophisticated in analyzing the data and determining rates. Further, as part of the approval process, in-house folks will do white hat hacking on a potential insured’s IT system. Then, the healthcare entity is informed of their vulnerabilities, which must obviously be repaired before a policy will be issued.
As we (hopefully) head into the final stages of the pandemic, Matt Gracey offers a sobering forecast for the days ahead. Effective risk management continues to be a top concern for providers; knowing the potential future pitfalls can make the task easier.