Second-year Claims Made Malpractice Insurance Rates:

Why the Big Increase in Premium?

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Purchasing medical malpractice insurance can be a costly expense for medical professionals, especially in recent years with premiums on the rise. Premiums have risen so much that many doctors have been forced to move to states that offer lower premiums or stop practicing medicine altogether. Regardless, there are ways that you can reduce medical malpractice insurance rates.


The average cost of insurance can vary from city to city or state to state, but that’s not the only consideration taken into account to determine rates. Let us first offer a brief overview of why premiums vary so much.



Geographic Location: One of the major considerations when determining malpractice insurance rates is the state where a professional practices medicine. Many insurance providers will look at the set insurance rates as well as the potential for malpractice lawsuits in that state and branch of medicine.

Claims-Made Policy Pricing Basics

Claims made policy premiums start relatively low in the first year because the exposure to claims is minimal—there’s no prior coverage period. 


In the second year, the premium increases because there's now exposure for claims from both year one and year two. Typically, second-year rates are around 60–70% of the mature premium (compared to ~35–40% in year one).

These percentages can vary depending on:

  • Specialty (surgical fields tend to be higher risk)
  • State/location
  • Carrier underwriting policies
  • Claims history


Why the Increase?

As each policy year passes, the insurer takes on more liability for potential claims from previous years. This increased risk is reflected in the rising premiums.

What to Watch For

Tail coverage: Since claims-made policies only cover claims made while the policy is active, you’ll need tail coverage if you switch insurers or retire.



In Conclusion

If you're planning ahead financially, it’s wise to budget for these yearly increases up to the mature rate, and talk with your broker about long-term options. 


It is important to note that shopping for new coverage at renewal time can sometimes save money.