Swiss Re Corporate Solutions has cut its entire US medical malpractice liability business, The Insurance Insider understands.
According to market sources, employees at the carrier’s medmal division were told their last day at the business will be 30 September.
News of the medmal withdrawal comes after this publication revealed earlier today that Swiss Re Corporate Solutions had cut back its global primary general aviation and space business.
The insurer has pulled back or withdrawn from several lines of business as it undertakes a major overhaul of its Corporate Solutions arm under new CEO Andreas Berger.
Speaking yesterday on Swiss Re’s second quarter conference call Berger said the carrier was working to remedy sustained under-performance and that it had already limited its activity in several markets.
The Corporate Solutions division is aiming to trim its annual gross premiums written by 20 percent, equal to $900mn.
In its second quarter 2019 earnings announcement on Monday, Swiss Re’s primary insurance arm disclosed a first half loss of $403mn and said it would reduce the large limits it offers on primary P&C business and cut capacity in select portfolios.
Berger joined the business in March from rival Allianz Global Corporate & Specialty and has conducted a review into every line of business and region covered by the unit.
The medmal market has been a source of pain for the insurance industry for some time. Earlier this year, this publication reported that rising claims and dwindling reserve releases meant that carriers would seek to increase rates.
However, overcapacity in the sector means any drives to push up pricing have been suppressed. A shrinking client base due to mergers and acquisitions within the healthcare industry has also limited underwriters’ ability to enforce meaningful rate changes.
Furthermore, an increasing number of solo practitioners have been grouping together or joined larger medical facilities, thereby reducing the number of insured entities.
At the same time, there is a trend for more generous judicial awards, bringing about significant losses to carriers.
Figures from AM Best show the US medical professional liability market generated some $7.4bn of direct premiums written in 2018, up 3.2 percent year on year indicating carriers are having at least some success in pushing through price increases.
However, 2014 to 2017 saw the market’s direct premium written continually reduce year after year from a high of $7.7bn five years ago.
The US medmal market is dominated by a handful of major players – Berkshire Hathaway’s various medmal operations means it is by far the largest business in the sector, while the Doctors Company, CNA, ProAssurance and Coverys have smaller writings but are still regarded as being market leaders.
ProAssurance itself has repeatedly highlighted the difficult trading conditions at play within the medmal space in recent months. Shortly after issuing its first quarter results in April, ProAssurance CEO Stan Starnes warned investors that broad loss trends in the sector were causing concerns for the company.
“Our concern about the broad loss trends in healthcare professional liability continues to have a major impact on operating results, and this increasing severity will likely affect our results for the foreseeable future,” said Starnes back in April.