RISK ENVIRONMENT

Commercial insurers ramping up scrutiny, restricting coverage

Insurance market conditions vary for healthcare organizations by line of coverage and industry segment. Individual insurance buyers may also experience varying conditions based on their size, risk profiles, and other attributes.

Executive risk lines mostly stable, but underwriting scrutiny growing

In healthcare, the market for D&O insurance is segmented. Rates for large healthcare systems — those with $1 billion or more in annual revenue — with strong financials are stable; those with weaker financials are seeing mid-single-digit premium increases at renewal. Systems in distress are seeing double-digit rate increases and are often required to take on higher retentions and coinsurance. Small and mid-cap hospitals are seeing generally stable pricing but more pressure from insurers on retentions.

At least one major healthcare insurer is pushing for premium increases of 50% or more for most risks, along with higher retentions. Another is cutting capacity, offering $5 million limits to buyers instead of $10 million as it had in the past. The market is seeing some new, opportunistic entrants, although some other carriers are exiting the market.

D&O insurers are scrutinizing healthcare organizations’ financials, including their cash on hand and overall profitability. Insurers are also asking about potential M&A activity, particularly for rural hospitals and federally qualified health clinics, and about gender-affirming care and diversity, equity, and inclusion (DEI) programs. In addition to higher retentions and coinsurance for large risks, insurers are increasingly restricting antitrust and regulatory coverage for healthcare organizations and reintroducing bankruptcy exclusions in policies.

Conditions are generally stable in other executive risk lines:

Employment practices liability (EPL)

EPL rates are rising in the low single digits for most buyers, but more sharply for organizations employing significant numbers of high-earning physicians. Insurers are scrutinizing DEI programs for these employers and monitoring sexual harassment, wrongful termination, and discrimination claims.

Fidelity/crime

Pricing for fidelity/crime is stable. Traditional named peril crime coverage — typically written to protect against employee theft, social engineering fraud, computer fraud, and funds transfer fraud — often results in claims being denied and gap issues between crime and cyber policies because it is difficult to prove the specific cause of a loss. The London market is now offering a new product that covers any kind of financial loss, without the need to prove causation, pricing for which is on par with traditional crime coverage.

Fiduciary liability

Fiduciary liability insurance buyers are seeing stable conditions, except for those with significant claims in the last year. More carriers have already added excessive fee retentions to address litigation trends; thus, renewals have been fairly consistent. In addition to excess fee litigation, insurers are watching medical plan litigation under the Employee Retirement Income Security Act of 1974 (ERISA) that is emerging but has not yet caused drastic market shifts. Insurers are generally using retentions rather than pricing increases to manage their risk.

Insurers have begun to apply greater underwriting scrutiny to healthcare organizations, returning to a core focus on financial viability to ensure they are not underwriting future bankruptcy targets. Healthcare organizations should proactively communicate financial and organizational changes — such as changes in business models or ownership, liquidity challenges, or debt maturities — to insurance brokers, as these factors can impact risk and coverage needs. Reinforcing strong governance, financial oversight, and HR practices during underwriting discussions can also improve organizations’ standing with insurers.

Cyber market difficult for healthcare

Although pricing has stabilized somewhat, the cyber insurance market for healthcare organizations remains challenging, especially for providers. For healthcare organizations, which are highly attractive targets for threat actors, cyber remains a persistent and growing risk.

Aside from the public sector, healthcare organizations face more cyber threats than any other critical infrastructure sector. Ransomware is the dominant threat. In May 2024, a ransomware attack against Ascension Health — attributed to the Black Basta group — disrupted operations across roughly 140 hospitals in 19 states. More recently, in May 2025, a ransomware attack against Kettering Health — attributed to the Interlock group — disrupted operations across roughly 14 medical centers in Ohio.

Beyond ransomware, other threats for healthcare organizations include:

Heavy reliance on cloud vendors and electronic health record providers, which introduces additional exposure to outages and breaches. The recent Microsoft and Amazon Web Services outages highlighted systemic risks for organizations across a range of industries, including healthcare.

Pixel tracking and biometric data amid growing concern about the use of these technologies by healthcare organizations’ marketing teams, often without information technology and information security departments’ awareness. Insurers are increasingly seeking to exclude pixel tracking and biometric claims under cyber policies.

AI and data privacy practices, which underwriters are closely scrutinizing. Insurers are especially concerned about the use of patient data and marketing analytics.

Healthcare organizations must strengthen cybersecurity and vendor oversight by implementing multifactor authentication, network segmentation, and annual incident response tabletop exercises while reviewing vendor risk protocols and contingent business interruption coverage. They should also address emerging technology risks by establishing governance frameworks for AI and other tools to mitigate privacy, liability, and regulatory concerns.

Healthcare professional liability rates rising

The market for professional liability is stable but challenging. Overall pricing continues to increase for physicians' groups, although not as sharply as in other segments, such as senior living.

Independent practitioners have limited carrier options, most of which are admitted markets. Larger groups have access to surplus lines markets, which can offer more favorable options. Meanwhile, private equity-backed groups are viewed as higher risk, with carriers remaining conservative on pricing and limits. Insurers also continue to impose sexual abuse and misconduct exclusions on policies, particularly for pediatrics and obstetrics.

Claims severity and frequency remain high, with misdiagnosis the most common allegation in litigation. Although Georgia and Florida have enacted meaningful tort reform, Pennsylvania in 2023 rescinded a rule requiring medical malpractice suits to be filed in the county where care is rendered, opening the door for “venue shopping” by plaintiffs. Insurers, meanwhile, are concerned that New York’s Grieving Families Act, which would expand who can bring claims for wrongful death and allow families to recover damages for emotional suffering in addition to financial losses, could increase litigation exposure if it becomes law.

With higher retentions and stricter terms increasingly becoming the norm, buyers must proactively engage with underwriters. A transparent approach to claims reduction and litigation strategy investments can help fuel more favorable outcomes at renewal.

Sexual abuse & misconduct coverage becoming more difficult to secure

Although not unique to the industry, sexual abuse and misconduct risk continues to be especially significant for healthcare organizations. This risk applies to all healthcare segments, including hospitals, clinics, rehab centers, and foster care facilities.

Catastrophic claims — including settlements that can reach into the hundreds of millions of dollars — have made professional liability and general liability carriers wary of underwriting this risk for healthcare, and have made the market for healthcare organizations extremely challenging. Insurers are keenly aware that a single claim can be devastating, especially with litigation financing and the effects of media exposure for high-profile cases amplifying costs and often triggering new litigation if more individuals come forward and allege abuse.

Many insurers are nonrenewing coverage, and within three to five years, many U.S. healthcare markets may stop offering coverage entirely. Where coverage is available, insurers are tightening terms — for example, drastically reducing limits, from as much as $15 million to as little as $1 million.

As the availability of coverage under professional liability and general liability policies becomes more limited, stand-alone sexual abuse and misconduct liability policies are gaining traction as an alternative solution. Although one carrier has offered such coverage for nearly two decades, other carriers have launched their own products. These solutions can provide:

Funding for defense costs.
Protection against retroactive cases, subject to certain conditions.
Access to risk management and crisis response services.

Challenging conditions for senior living

The senior living space includes two distinct models that can present a variety of clinical, operational, reputational, and financial risks:

ASSISTED LIVING COMMUNITIES,

which use a social model to deliver services to residents.

SKILLED NURSING PROVIDERS,

which use a medical model to deliver post-acute care to patients.

The markets for professional liability and general liability for this space are challenging. Leading carriers are often declining to write coverage for senior living providers; where coverage is available, sublimits are being imposed — for example, for wounds, falls, and abuse — and retentions are increasing.

The litigation environment is troubling, particularly for the skilled nursing segment, with hotbeds including New York City, Atlanta, Arizona’s Maricopa County (home to Phoenix), Illinois’ Cook County (home to Chicago), California, New Mexico, Florida, and Kentucky. Plaintiffs’ attorneys specializing in senior living and post-acute cases are aggressively mining patient data for opportunities, and nuclear verdicts and settlements are making it increasingly difficult for providers to secure coverage, especially for excess liability.

The auto liability insurance market also remains challenging. Where seniors are involved, even minor incidents — for example, failure to slow or stop for a speed bump — can result in catastrophic claims.

It’s vital that senior living organizations stay abreast of emerging risks and evolving industry dynamics and that they use analytics and modeling to anticipate key loss scenarios and test liability insurance program structures. Organizations should also treat renewals as an ongoing process: Engage brokers early and maintain open dialogue with underwriters throughout the calendar year to avoid unexpected shifts in pricing and terms and conditions.

Profitability keeps workers’ compensation stable

Although some headwinds persist, workers’ compensation remains among the most profitable and competitive lines for commercial insurers. For most buyers, pricing remains generally flat; those with favorable loss histories are seeing especially competitive conditions. Capacity is ample, and carriers are generally eager to deploy capital and compete. Some insurers, however, are pulling back due to prior aggressive pricing and concerns about loss development.

Healthcare organizations are also seeing greater underwriting scrutiny, in part due to high wage growth and more frequent injuries for first-year employees. Insurers are also monitoring efforts to expand mental health coverage under workers’ compensation across several states. Workplace violence remains a key concern for employers and insurers.

For healthcare employers, risk differentiation during upcoming renewals is crucial. Buyers can secure more favorable pricing by highlighting strong safety and loss control programs — including detailed and up-to-date incident response plans — and highlighting proactive claims management. Insurance buyers should also revisit retentions and collateral levels/instruments in light of changing economic conditions.

Property market competitive despite climate change concerns

Commercial property continues to deliver strong returns for insurers. Carriers are actively defending their portfolios while competing for new business. Even on challenging accounts — those with significant losses or heavy catastrophe exposure — discipline remains the norm. Yet, in practice, many of these buyers are still benefiting from improved pricing.

2025 began on a tense note with California wildfires and severe spring storms. However, the Atlantic hurricane season defied expectations, with no hurricanes making U.S. landfall for the first time since 2015. This calm season provided insurers with a welcome earnings boost. Still, both insurers and insureds understand that one quiet season does not remove the long-term threat presented by climate change.

Healthcare organizations can generate more favorable property insurance renewal outcomes by highlighting investments in risk management and resilience, which remain key differentiators for competitive but disciplined and selective insurers. Healthcare insurance buyers can also use analytics to model potential losses, demonstrate risk quality to insurers, and make more informed decisions about program structure.