As US healthcare markets harden, brokers and clients navigate higher costs, narrower options, and more complex program designs. Brett Pollak (pictured), senior managing director and director of M&A development at Foundation Risk Partners, said today’s conditions mirror the early 2000s, with meaningful implications for providers.
“The biggest challenge is we’ve returned to a tight market,” Pollak said. “We’re back to where we were in the early 2000s, where pricing has escalated. There’s not only price pressure, but there’s also accessibility as an issue. It’s a much narrower market.”
Several risk retention groups and captives that had entered the market have since disappeared, leaving clients with fewer choices. “As you know, with fewer choices, you tend to see a spike in pricing,” he said.
Geography also influences pricing. Florida, for example, performed relatively well due to tort reform that limited large verdicts, helping insurers maintain profitability. “As opposed to the Northeast, where it’s a little bit of the Wild West. You can have very large verdicts in favor of the plaintiff, which creates pressure for underwriters to push pricing higher,” Pollak said.
Executives often underestimate nuances in malpractice coverage. Pollak highlights two main policy types: claims-made and occurrence. Occurrence policies are more expensive, while claims-made policies start lower but increase over the first eight years. The challenge comes at the end of claims-made policies, where an extended reporting period - or “tail” coverage - is required unless a provider retires permanently, sometimes at significant cost.
To manage this, many organizations consolidate programs. Larger institutions that aggregate smaller practices under a single management services organization (MSO) increasingly standardize policies across providers, using claims-made forms. “It creates some complications, but if structured the right way, there could be very meaningful savings,” Pollak said. Techniques exist to manage tail exposure, making these consolidated programs appealing to cost-conscious clients.
Pollak’s experience in M&A shows how brokerage consolidation affects market access. “Medical malpractice in general is a specialty business,” he said. “It tends to be the same five to seven brokerages on most of the large accounts. Those tend to be some of the larger players that are either actively aggregating independent agencies or have some sort of roll-up strategy.”
Smaller independent brokerages have historically played a limited role, even when markets were broader. Consolidation has maintained this concentration, reinforcing the importance of specialized brokers for clients navigating the space.
Rising costs, fewer choices, and complex coverage structures have made strategic program design essential. Programs that consolidate multiple practices, optimize policy forms, and manage tail exposure could deliver significant savings without sacrificing protection.
“Clients needed to think strategically about their programs,” Pollak said. “There are opportunities to redesign coverage in ways that are both cost-efficient and protective – but it requires expertise and a long-term view.”
