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MPL Liability Insurance Sector Report: 2023 Financial Results Analysis and 2024 Financial Outlook

Wednesday, May 22, 2024, 2:00 p.m. ET
Hear analysis and commentary on 2023 industry results and learn what to watch for in the sector in 2024, including an analysis of the key industry financial drivers.

MPL Association’s National Advocacy Initiative in Full Swing

The MPL Association is shifting its focus toward state policy makers with a new program—the National Advocacy Initiative. This comes at an important time for the MPL community as the deteriorating policy environment in the states is resulting in increasing attacks on established reforms.

Inside Medical Liability

Second Quarter 2022




London Market Outlook for Medical Liability: The Only Certainty Is Uncertainty

The last few years have been challenging for the insurance market. From natural events like wildfires, unprecedented floods, hurricanes, and tornadoes, to the COVID-19 pandemic and now the Russia–Ukraine conflict, the constant flux and turmoil has been unrelenting.

By Peter Cordell


It is no wonder that many in the insurance market have begun to question whether the parameters of normality have fundamentally changed.

The outlook for the London market, particularly in medical professional liability (MPL), is no different from the global picture. We are faced with the same uncertainty, along with an increasing number of outsized claims. While the landscape is complex, the industry must adapt to this new normal and be prepared for the unexpected if it wants to succeed.

The best way to address the increased uncertainty is by being proactive and actively scanning the risk horizon. This can be achieved by using the tools, services, and products at our disposal. One such element includes the use of reinsurers. Reinsurers must take on a greater role in times of turmoil as their large balance sheets are key to smoothing the cycle and easing the burden on the primary market.

Strong Historic Response to Crisis

As the market finds itself in yet another period of crisis, it is helpful to remember that the industry has successfully navigated through previous difficulties. Most recently, the response from the MPL industry in the early stages of the pandemic was excellent. Insurers adapted to better understand the uncertainty faced by clients through employing enhanced risk management education. This helped to make the dealings between insurers and clients more efficient and productive. This, in turn, led to pricing confidence and greater premium adequacy.

Similarly, Lloyd’s and the London market worked tirelessly to minimize the impact of Brexit on business. The increased administration burdens led to friction when placing risks from the European Union into the Lloyd’s market. This, in part, is due to the requirement to transact business with Lloyd’s’ Brussels subsidiary. On the whole, the London market has adapted well to the uncertainty posed by the 2016 referendum.

New Year, New Challenges

Entering 2022, with political rhetoric in the UK shifting to “living with COVID,” the market is expected to enter a post-COVID-19 environment and return to some degree of normality. The greatest concern has become inflation. Debates centered on whether inflation will be transitory or will require further tightening of fiscal policy.

However, the changing geopolitical landscape has greatly impacted the outlook for the London market. The ongoing conflict in Europe has created a perfect storm of significant supply chain disruption alongside the very real consequences of Russian sanctions. We are seeing disruptions of wheat, sunflower oil, and fertilizer exports, as well as sharply rising energy prices. This confluence of disruptions has significantly heightened concerns around the impact of inflation, rendering recent inflation predictions irrelevant.

Supply chain issues could have a significant impact on the MPL market, with the cost of medicines and claims increasing. The situation may continue to deteriorate should supply chain constraints worsen. Insurers must also remain mindful that government fiscal policy uncertainties may make matters worse.

Compounding the problem for insurance carriers, investment income has been heavily affected by ongoing market volatility over the past few years. The sanctions on Russia will exacerbate market volatility, making it more challenging to achieve the returns of the past. This will impact insurer and reinsurer margins going forward.

Social Inflation

Beyond the very real inflationary concerns, a term that is increasingly cropping up in the market’s lexicon is social inflation. This term refers to how insurers’ claims costs rise over and above general macroeconomic inflation.1 Most commonly, social inflation seems to relate to the legislative and litigation realm, but the broader definition stretches to include the impacts of wage and price inflation, medical cost inflation, societal shifts, and the emergence of new risks.

Ultimately, the cost of claims is driven up by the cost of care and medicines, and the loss of income and benefits. With increases in the cost of healthcare alongside wage inflation, claims severity is likely to continue to trend higher. By examining the potential impact of social inflation, it is evident how this trend further exacerbates the already challenging macroeconomic backdrop, placing the MPL market under extreme pressure to adapt to its new normal.

U.S. Litigation Landscape

Many countries around the world are becoming increasingly litigious. This is particularly true for the U.S., largely due to the makeup of its judicial system. In 2021 in Florida, a verdict was handed down for $1 billion over a trucking accident.2 Whilst the collectability of such an award is questionable, it sets a benchmark upon which other awards are gauged and desensitizes future juries to the actual monetary values at stake.

MPL lawsuits have become big business for law firms. Plaintiffs’ lawyers are becoming well practiced at selling these stories to jurors. Sometimes coined “reptile theory,” the idea that many plaintiff ’s lawyers use to appeal to the core emotional sensibilities of the jurors rather than presenting the facts of the case objectively.3 This is an issue complicated by the jury selection process, which can increase the odds of a sympathetic jury. With the addition of litigation funding, a growing trend in the market, law firms can be well armed to maximize the outcome for their clients. It is clearly important to have litigation as an available route to protect the interests of the system and ensure the right outcome for all parties. However, the aggressive and financially motivated environment that we have seen in the US does create issues for the market, and its success may lead to its replication in other regions.

London Leading the Way for Cyber Coverage

2022 will see the Lloyd’s Market complete its exercise to provide greater clarity of coverage regarding cyber coverage. This has been a market wide exercise to help define how insurance and reinsurance contracts respond in the event of a cyber event, moving away from the position of remaining silent contractually.

Whilst this has not always been the simplest of tasks, Lloyd’s and the Lloyd’s Market Association have been at the forefront of creating new language to help provide confidence as to how individual policies will respond. The market will also identify any areas where additional protection may be required. In the fast-moving world of cyber coverage, it is beneficial for all parties to understand what coverage they have purchased.

Looking Ahead

The market has shown great resilience in bouncing back from these challenges historically. With more black swan events occurring every year the industry cannot afford to become complacent. As such it is essential that the market continues to shift its way of thinking and begins to view these impactful and extreme loss events as a potential new normal. Shifting mindsets, expectations, and modeling from high volatility/low probability to high volatility/high probability is a sound practice. By taking a forward-looking approach and continuing to be proactive in developing innovative risk management, stakeholders can decide on the appropriate tools to respond with, which include reinsurance.


1. “Social Inflation: Navigating the evolving claims environment,” The Geneva Association, December 2020, research-topics-document-type/pdf_public/social_ inflation_web_171220.pdf.
2. “In 2021, a Record Setting $1 Billion Dollar Verdict Was Rendered Against a Trucking Company—Demonstrating that Nuclear Verdicts in Trucking Cases Continue to Rise,” Baker Sterchi Cowden & Rice, LLC, Jan. 11, 2022, 120162&format=xml&stylesheet=blog&p=5258.
3. “Reptiles in the Courtroom: Cold Blooded Tactics in Medical Malpractice, March 2018, Piedmont Liability Trust,



Peter Cordell is head of Casualty Reinsurance at MS Amlin.