As Reform Takes Effect, Health Care D&O Rates Increase

Insurers are seeking price increases for D&O liability insurance for health care companies, and many are reconsidering the scope of coverage offered as the ACA takes effect.

Although not all insurers are seeking dramatic changes, some are pulling back on offering full policy limit defense coverage. In addition to seeking significant price and retention increases, one insurer that has taken a particularly aggressive stance has restricted availability of antitrust coverage to a maximum of $5 million across all financial and professional lines.

As the health care industry adapts to changes necessitated by Affordable Care Act implementation, the vast majority of health systems and smaller health care organizations saw increases to their primary and total D&O rates in the third quarter.

According to “As Reform Takes Effect, Health Care D&O Rates Increase,” as companies establish provider networks and enter into new payer contracts, they face additional risks and expanded errors and omissions exposures. Insurers have responded with rate increases:

• Average primary D&O rates for midsize and large health systems increased 9.6% in the third quarter of 2013. Total program D&O rates for midsize and large systems increased 7.9% in the third quarter. Nearly all organizations — 91% — renewed with rate increases.
• For smaller health care organizations — $150 million or less in assets or annual revenues and fewer than 1,000 employees — D&O rates increased 12.7% in the third quarter. Nearly all organizations in this segment — 96% — renewed with rate increases.