When doctors make mistakes

In the past, doctors were frequently known as "gods in white coats". Their diagnoses and decisions were rarely questioned. Lawsuits based on errors in treatment were also a rarity. Patients today are better informed and more critical, while media reports about bungling in hospitals add to people's concerns. Lawsuits against doctors are increasing and indemnity costs worldwide are rising.   This situation is creating numerous opportunities for medical liability insurers to satisfy patients' desire for compensation on the one hand, while meeting the professionals' need to cover the treatment risk on the other. However, insurers looking to exploit these opportunities will have to closely scrutinise the cultural, economic and legal conditions in each market.

As both national and international statistical data are not yet available, it is very difficult to accurately estimate the global market. The largest MedMal market – the USA – recorded an estimated premium volume of around €8bn (US$ 10bn) in 2009. The US share of the worldwide liability market is around 50%. If that share is now applied to MedMal, this would mean that the worldwide premium volume is currently in the order of about €16bn.

And this is by no means the end of the line in terms of potential growth in this market. For example, standards of care and demand for medical treatment are steadily rising in the emerging markets And the patients' claims mentality is increasing at the same time. This trend is currently emerging in many Latin American countries, for example.

In more highly developed markets, the healthcare sector is growing at a much slower pace, but victims are increasingly being backed by court rulings and the amount of damages awarded is soaring to unprecedented heights.

Interesting opportunities are sure to be available in the highly populated emerging markets, if only on account of the large number of potential policyholders. In China, for instance, there are 1.86 million doctors as compared to 0.73 million in the USA; this is equivalent to 26 doctors per 10,000 inhabitants in the USA but only 14 in China. This ratio will increase if the economy continues to develop as at present. In addition, China has transferred liability from the state to the hospitals and compulsory insurance has been introduced for hospitals in large urban areas. As the country develops further, people will become increasingly willing to spend money on their medical care and to take court action if they are not happy with the treatment they received. Roughly one-third of the world's population lives in countries which qualify as "lower middle income". These countries' populations are relatively young. Similar developments can be expected there as affluence increases.

Income and density of treatment are possible demand triggers. However, potential greatly depends on the economic and cultural development of a particular country, its liability law and how the insurance market is organised. A neat statistical appraisal of the risk and expertise in risk selection as well as in risk management and claims handling are consequently indispensable to the success of any insurer seeking to operate in this segment. The latest issue of TOPICS MAGAZINE (2/2011) analyses developments in markets such as France, Canada and the USA and outlines legal developments and trends.