MPL Association—A Rich History of Supporting Insurers and Medical Professionals

In the mid-1970s, the medical professional liability (MPL) insurance industry was on the verge of a crisis.

By Susan Beach and Eric R. Anderson

 

Between 1969 and 1975, the number of medical liability claims filed against physicians had tripled. This factor, combined with actuarial predictions of staggering increases in the costs of medical liability awards and settlements, compelled the primary sources of medical professional liability insurance—the commercial insurance carriers—to raise rates to levels never before seen or abandon the line of business entirely.

For most of the commercial carriers involved in this market, MPL was a relatively small line of business. Because they didn’t specialize in MPL, the long tail nature of the business made it easy to miss trends. During the 1970s, the tort laws in many states moved toward a posture that was more favorable for plaintiffs. While the plaintiffs’ bar of the time recognized the new potential in malpractice suits, most commercial insurance companies with an MPL line did not like to try cases. This set up a situation in which plaintiffs’ attorneys realized that the increasing complexity of medical procedures and the introduction of many new drug treatments led to generally positive, but also unexpected, results, while MPL insurers lagged behind in this recognition.

As a result of the these and other factors, physicians faced a rapidly shrinking insurance market in the 1970s. Out of options in much of the country, physicians banded together with insurance professionals and organized medicine—medical societies and hospital associations—to form a new breed of insurance company: the physician-owned medical professional liability insurance carrier. Over time, these new kinds of companies were launched throughout the nation.

These new companies differed from the commercial insurance carriers in philosophy and in their of commitment to their insureds. They pledged to provide affordable insurance protection and also to find ways to minimize risk among their physician colleagues. These enterprises melded the skills and knowledge of physicians and insurance professionals into a fresh approach to addressing MPL challenges. In most companies, physicians were directly involved in underwriting decisions and claims management. Many of the companies had low levels of initial capital and those running the companies were often “learning on the job.” A number of the companies benefitted from support within the reinsurance community, especially Lloyds of London.

A Forum for MPL Companies

In 1977, those newly established companies formed the Physician Insurers Association of America (PIAA) to provide a forum for exchanging information and helping one another lead these new companies. The PIAA would also serve as an advocate for an affordable and dependable MPL insurance market. The new association would help make it possible for its member companies to offer reasonably priced liability insurance to healthcare professionals. Furthermore, as the unified voice for this unique industry, the PIAA was in an excellent position to promote the practice of high-quality and safe medicine and to work to enact and defend tort reforms.

In 1978, the PIAA was incorporated with offices in New Jersey and the day-to-day operations were managed by MIIX New Jersey president Peter Sweetland. Sweetland was a founding member of the Association, and one of its chief architects. He was supported by Joyce Harbourt, the first employee of the PIAA and a contributor to the growth and success of the Association. Sweetland remained an ardent supporter of the PIAA until his death in 1990. In honor of his contributions, the Peter Sweetland Award is presented at the Association’s annual conference each year and recognizes an individual from a member company who epitomizes the high ideals and ethics for which Sweetland stood.

From its inception, the PIAA was more than just a trade association. Its leaders saw the organization as a medium through which like minded companies could share knowledge, experiences, and common principles. The organization also served as a source for essential information and education. The initial work of the Association took place in its membership meetings.

Managing Cycles and Growing Companies

In 1985, the PIAA established the Data Sharing Project (DSP), which eventually grew to become the largest ongoing independent database of MPL claims in the world. The DSP collected and analyzed member company data to develop a national overview of claim trends, and to identify areas of practice most vulnerable to assertions about liability. This development established the Association’s reputation as a trusted source on MPL claims and insights on industry trends. Over the years, member companies, government agencies, media outlets, medical schools, and other healthcare organizations have all benefited from new information derived from the Association’s data and research. Today, the DSP is widely used by Association members and researchers to enhance risk management and patient safety.

A second liability crisis swept across the nation in 1985 and 1986. Steep premium increases in most states were implemented due to rising losses. Combined ratios reached 160% and higher, resulting in more support for additional tort reforms.

By the early 1990s, frequency and severity flattened out. Investment returns increased and most companies were able to build surplus. Rates stabilized and competition increased, leading to a prolonged soft market. Investment returns allowed companies to be profitable and grow their surpluses, even with combined ratios of 100%-115%. The Risk Retention Act of 1986 made it easier for some organizations to write in non-domiciliary states with minimal regulation.

During the 1990s, the PIAA refined its mission, enlarging the scope of services provided to its members. As part of this transformation, the Association’s leaders considered how it might advance risk management, and thereby the safe practice of medicine.

In 1993, the Association decided it was important to become a more visible presence at the federal level in order to protect member companies from legislation that would restrict, or worse, endanger their operations. It became clear that U.S. federal legislators in Washington, D.C., needed to understand the essential role member companies played in preserving the country’s healthcare. Moving the Association to the nation’s capital became a necessity and the organization eventually settled in Rockville, Maryland, after its first few years in downtown Washington, D.C.

At the end of the 1990s, rising loss costs and competitive rates triggered a third liability crisis—a crisis of affordability for doctors and survival for undercapitalized insurers, though none were Association members.

Association Expansion

PIAA originated as an organization comprised of companies that insured only physicians. However, as the healthcare market expanded, the Association broadened its scope to include entities that insured other types of healthcare practitioners. Carriers operated by dentists and oral maxillofacial surgeons were added to the ranks of the regular membership, along with organizations that offered MPL coverage for hospitals, podiatrists, and chiropractors. PIAA welcomed its first risk retention group in 1993 and its first hospital-system captive in 1997.

Also in the 1990’s, the Association established an international membership category for companies that conduct medical indemnity and MPL insurance operations outside of the United States. The initial international member companies were based in the United Kingdom, Canada, Australia, and other parts of Europe. Many of the international members are mutual companies.

In an effort to keep members apprised of the latest products, services, and technological advancements, and to offset the Association’s reliance on dues income, it instituted an Affiliate Partner program. This program was developed for companies that provide goods and services to PIAA member companies. Affiliate Partners include reinsurers, reinsurance intermediaries, financial service providers, actuaries, accountants and auditors, IT consultants, brokerages, and more.

The Association also created an Affiliate Partner segment dedicated to defense law firms. Each of these firms have an ongoing business relationship with a current member.

New Name for an Evolving Association

In December 2016, the Board of Directors and senior leadership team of PIAA elected to update the organization’s strategic plan. The updated plan was based on membership surveys, industry information and analysis, and interviews with the Board and key stakeholders. The results of the Board’s efforts focused the Association’s future strategy.

One of the important initiatives of this updated plan was to clarify and strengthen the Association’s brand. Toward that end, the board appointed a brand task force comprised of individuals from member companies with experience in major (re)branding projects. After careful consideration of the task force findings, the board of directors voted unanimously to change the Association’s name to the Medical Professional Liability (MPL) Association.

This name better positioned the Association to keep pace with the change its members and the evolving MPL community were experiencing. The Association’s new brand was designed to strike a balance among the physicians and all those providing care; the business of MPL insurance; the shifts within healthcare that are forcing an evolution of practice models; the increasing scope of options for alternative risk financing; and the expanding MPL international marketplace and membership.

Today’s MPL Association

In 2022, the MPL Association is the world’s leading trade organization representing the MPL community.

Association members are international and U.S.-based MPL indemnity and insurance companies, risk retention groups, captives, trusts, and other entities. Association members insure nearly 2.5 million healthcare professionals around the world—doctors, dentists, oral surgeons, nurses and nurse practitioners, podiatrists, and other healthcare providers. MPL Association members also insure nearly 3,000 hospitals and 15,000 medical facilities and group practices globally.

The Association’s international members are based in eight countries—Australia, Canada, England, France, Scotland, and the Netherlands—they indemnify healthcare professionals in Europe, Canada, Asia, the United States, Australia, the United Kingdom, and elsewhere.

The past few years have been shaped by COVID-19, prompting the MPL Association to adapt to myriad challenges, addressing advocacy issues, reimagining programs, convening new forums for knowledge sharing, and gathering and analyzing data.

Implementation of a new 2021-2024 strategic plan is underway after a thorough, data-driven process over the past 12 months. In the months and years ahead, the board of directors and Association staff will focus on three major areas:

• Deliver Essential Value: Build on the Association’s compelling value proposition to grow member engagement while advancing the organization’s leadership role.
• Drive Innovation: Deliver information and intelligence that enables transformative change within member companies.
• Maximize Impact: Amplify the Association’s position as a leader that creates actionable solutions to emergent opportunities and challenges.

Each initiative will include a number of key projects and activities based on input gathered from our member companies and key stakeholders. The next few years will be exciting ones for the healthcare industry, the business of insurance, and MPL organizations. The MPL Association is committed to building on the successes of the past to provide ongoing value to its members.

 

 

 

At the annual conference May 11-13, 2022, in Salt Lake City, the Association will recognize and celebrate the organization’s founding members.

 

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