The medical professional liability (MPL) industry is experiencing a period of transition as impact of the COVID-19 pandemic recedes from the healthcare landscape. In the midst of obstacles and opportunities, MPL insurers in 2023 worked to address emerging trends and uncertainties in the evolving healthcare landscape.
This transitional period is still underway, as these organizations continue to face challenges such as tort reforms, rising reinsurance costs, staffing challenges, and ongoing hospital consolidations. Amid the changes, MPL insurers must navigate varying market cycles as they work to maintain financial strength and stability so they can continue to provide robust insurance coverage to healthcare professionals and facilities.
These challenges have coincided with a period of transformation that includes both technological and business evolution. The industry is showing signs of improvement with better rate adequacy, diminishing pandemic-related exposures, higher reinvestment rates, and improved overall returns—evidence of a resilient insurance sector.
To fully modernize coverage within the MPL industry, associated insurers should consider leveraging a digitization-forward strategy that includes adopting the right technological solutions, using data analytics, implementing telemedicine coverage, and enhancing cybersecurity measures.
Technological Evolution
The rising tide of global innovation and digitization has affected a wide range of industries, particularly in the wake of the COVID-19 pandemic, which accelerated a shift to remote work and the need for digital solutions.
But the stakes are especially high for MPL and other insurance sectors. As a legacy industry, insurance has long relied on manual processes, particularly in documentation and workforce management, which has rapidly turned into a logistical and business liability. MPL insurers and other providers faced challenges with manual check issuance and physical policy document printing, prompting a move towards online document distribution and payment services.
The pandemic also catalyzed the need for cloud hosting solutions that reduce reliance on onsite infrastructure and allow for seamless remote functionality. Cloud solutions are now essential across the insurance industry, enabling faster implementation of services and solutions and better scalability.
Business Evolution
Technological integration is about more than just logistical convenience and workflow—the pursuit of cost efficiency is ultimately what drives the ongoing need for modernization and digitization.
Not only do investments in better technologies pay off in terms of internal cost efficiency, but the improved care they facilitate ultimately lowers malpractice claims and insurance premiums—an economic boon for both healthcare organizations and their MPL insurers.
These effective technology solutions require strong partnerships with vendors, particularly in regard to the integration of cloud technologies. Indeed, the cloud has shifted data storage from on-premises installations to vendor-managed data centers, necessitating a trustworthy relationship between healthcare organizations and the vendors that are managing the flow and storage of their often-sensitive information.
Keenly managed data—whether pertaining to hospital logistics, prior malpractice instances, or patient medical records—is another way healthcare organizations can help eliminate errors, enhance patient safety, and reduce the number of MPL claims which will in turn reduce MPL insurance premiums. In this context, keenly managed data refers to the practice of actively supervising every aspect of data collecting, storage, processing, and usage within your insurance organization. This includes data governance, data quality management, data security, data analytics, data compliance, data risk management, customer trust and transparency, and more.
Challenges and Strategies
There are three steps that MPL insurers can take to efficiently and effectively adapt to rapid technological advancements:
- Identify skilled professionals who are familiar with both insurance processes and cutting-edge technologies. A project leader with a foot in both worlds will be best equipped to handle integration and data flows.
- Empower your business users to take control over the forms, documents, and accounts associated with policies and claims—enabling the management of the constantly evolving business support functions, facilitating faster and more flexible change management.
- Increase your digital footprint, allowing for better marketing and brand management to convey a technological sophistication that matches customer expectations. Gone are the days of 8-5 support services or opportunities that present themselves in structured inputs. Customers now expect to be able to transact or communicate whenever they are ready. Opening more digital channels for information flow increases business opportunities.
These are not just a way for carriers to offload their responsibilities onto their customers. Rather, by making these processes seamless and digitally optimized, the process of document management, claims filing, policy onboarding, and more will be easier for both parties with improved speed and data accuracy.
Pre-integrated insurance software solutions from trusted vendors, agile methodologies, and iterative development processes, are all useful tools for accomplishing the above goals and meeting insurers’ business needs more efficiently.
Four Trends to Explore
While the insurance technology environment is constantly evolving, there are four trends that are worth paying attention to: artificial intelligence, data analytics, telemedicine coverage, and data security and privacy.
Artificial Intelligence (AI): Unsurprisingly, AI is becoming a critical tool in modernizing MPL. For documentation processes, AI can seamlessly automate filing systems, leverage existing intellectual property such as document repositories in real time, identify relevant document language, and streamline the creation and modification of insurance documents. By optimizing documentation processes with AI, MPL insurers can enhance operational efficiency, accuracy, and decision-making capabilities.
It is worth noting that the MPL sector has taken a cautious approach to adopting generative AI—due both to the tendency of new technologies to overpromise and underdeliver as well as the regulated nature of healthcare and related industries. But AI’s latest generative iteration is also poised to transform the industry—enhancing the customer journey, streamlining business processes, and reducing manual labor, all of which cuts costs and bolsters efficiency.
Generative AI has the potential to allow customers to seamlessly file claims, process claim information, renew policies, and more, without the need for traditional, often cumbersome, interactions with websites, phone prompts, or brokers.
Data Analytics: Data analytics is yet another keystone of digitization within the MPL sector. Insurers gather vast amounts of data—from claims histories to customer particulars and beyond. Data analytics can turn this information into actionable insights that can be used to make better business decisions.
For instance, data analytics can help insurers assess risk more accurately by analyzing historical claims data, identifying trends, and predicting potential areas of liability exposure. They can similarly improve underwriting processes by evaluating risk factors, setting appropriate premiums, and customizing coverage based on individual risk profiles.
Insurers can also leverage data analytics to streamline claims management processes by identifying fraudulent claims, assessing claim severity and expediting claim resolution, cutting costs, and improving customer satisfaction along the way. Advanced analytics tools can detect patterns indicative of suspicious activities, helping insurers combat fraud and reduce financial losses.
Data analytics also allow for the creation of predictive models, which helps insurers to essentially forecast the future—the ability to anticipate claim trends and estimate reserve requirements allows them to optimize resource allocation for better risk management.
Telemedicine Coverage: While many technological solutions are applicable across insurance sectors, telemedicine coverage is particularly suited to MPL insurers. By expanding access to care, reducing liability risks and enhancing risk management, implementing telemedicine coverage can help MPL insurers address several challenges.
For example, with its unique ability to bring healthcare services to patients in remote or underserved areas, telemedicine reduces the risk of malpractice claims due to delayed or inadequate care. It also helps mitigate liability exposure by addressing risks associated with virtual care delivery, such as data security breaches or miscommunication.
By incorporating telemedicine coverage into their offerings, MPL insurers will better adapt to evolving healthcare trends and strengthen their risk management strategies in a rapidly changing healthcare landscape.
Data Security and Privacy: Every insurance organization needs to attend to data security and privacy amid modernization efforts. The downside of robust digitization is that it opens up significant new cybersecurity vulnerabilities that, if left unaddressed, will leave MPL insurers and their customers exposed to evolving risks. As such, robust cybersecurity measures are the final critical piece of modernization in MPL insurance. Without it, MPL insurers won’t be able to adequately protect sensitive data, prevent data breaches, comply with regulations, and mitigate risks.
Robust cybersecurity measures safeguard patient health information, claims data, and financial records from unauthorized access, helping to prevent financial losses, reputational damage, and legal liabilities. Ensuring compliance with regulations like HIPAA is critical for maintaining the security and privacy of patient information—a cyberattack or data breach is a quick way to violate such regulations.
A strong cybersecurity posture also enhances trust and credibility among healthcare providers, policyholders, and regulatory authorities, reinforcing the insurer's reputation. By focusing on cybersecurity, MPL insurers can create a secure and resilient operating environment that enables the rest of their digital infrastructure to run as smoothly and risk-free as possible, protecting data and maintaining stakeholder confidence.
Simple Solutions
With an increasing emphasis on cost reduction, operational efficiency, and digital transformation, the MPL industry is evolving to meet the new demands of a hyper-connected world.
Indeed, as we’re seeing in numerous other industries, cloud-based solutions, AI integrations, interconnected digital workflows, and robust cybersecurity are reshaping how MPL companies operate.
But this won’t happen overnight, and it doesn’t happen in a vacuum—collaboration between vendors and insurers will be crucial in navigating the complexities of this transformation. With the right approach, MPL insurers will be able to cut costs, enhance workflows, and provide better, more robust liability protection, keeping healthcare organizations well equipped to best meet their patients’ needs.