Since When Did Health Care Become More About Convenience Than Security?

According to a white paper by cybersecurity provider Sophos in May 2021, 34% of health care organizations were hit by ransomware in the last year.

The use of telehealth stands to remain a major health care trend. But passive acceptance of its benefits without weighing its risks is not advisable.

Kyle Pass, health care broker for Risk Placement Services, said the popularity of telehealth has boomed in the last couple of years: “It’s exploded and it is only going to get bigger,” Pass said. “We were catapulted into this by the pandemic. Telemedicine has taken over.”

The Fast-Paced Adoption of Telehealth

A report by Liberty Mutual Insurance, “Healthcare’s New Reality: Risk Trends Year in Review,” singles out telehealth as a major health care trend in 2022.

Kyle Pass, broker, RPS Healthcare

According to the report, patients and providers alike are embracing telehealth. Telehealth visits were up 154% in March 2020 compared to March 2019; 46% of patients used telehealth for some visits; and virtual medical visits accounted for more than 20% of the total in 2021.

“Patients like the convenience and speed of delivery,” Pass said. “They can sit on their couch while they are watching TV and consult with their primary care physician.”

In addition to the boost given to telemedicine by the pandemic, the Liberty report noted other forces increased its use, such as the CARES Act, which removed regulatory and financial barriers for greater telehealth adoption.

Some other developments in telehealth include that it is available for all patients (not just those in rural areas); it allows providers to deliver telehealth services across state lines, subject to state laws; and it enables doctors to provide remote patient monitoring for acute and chronic conditions.

But Great Technology Brings Great Risk

As appealing as that is for some patients, the Liberty Mutual report also outlined some areas where risk may be increased.

These include:

Increased exposure for hackers to access patient/doctor communications
Increased chances of misdiagnosis due to not being face-to-face
Reduced accuracy when patients take metrics, such as blood pressure, at home
Higher compliance exposure with state rules if patients take a virtual appointment out of state
Increased exposure to battery claims due to a lack of proper consent regarding telemedicine risks

It’s fairly easy to see how some of these problems could occur, Pass said.

“Obviously, with telehealth, you’re talking to someone over the phone or computer. It’s never going to be as accurate or personal as the face-to-face meetings that we are used to. As a result there could be a misdiagnosis. Without that in-person visit, miscommunication can easily occur.”

Technology is far from perfect, Pass added.

“There could be a system outage with a computer and a doctor could miss something a patient mentioned,” he said. “Or maybe a picture sent by a patient is distorted or never received. For a lot of great reasons, we are putting our trust into technology, but at the same time that also opens us up to more risk.”

Ransomware and Cyberattacks on Health Care Systems

The risk that has gained the most attention is ransomware and cyberattacks on hospitals and health care clinics.

According to a white paper by cybersecurity provider Sophos published in May 2021, 34% of health care organizations were hit by ransomware in the last year.

Other findings included:

65% of health care groups that were hit by ransomware in the last year said the cybercriminals succeeded in encrypting their data in the most significant attack.
44% of those whose data was encrypted used backups to restore data.
34% of those whose data was encrypted paid the ransom to get their data back in the most significant ransomware attack.
Almost two-thirds of health care respondents (63%) who reported they hadn’t been hit by ransomware in the last year expect to be hit by ransomware in the future. Conversely, 37% don’t anticipate an attack.

A recent attack that hit the headlines was at the Good Samaritan Hospital and St. Mary’s Medical Center in West Palm Beach, Fla. Both are owned by Tenet Healthcare and were among numerous hospitals targeted in April 2022.

One costly cyberattack in 2020 occurred at the University of Vermont Medical Center, which detected a file with instructions to contact the alleged perpetrators of the cyberattack. The center locked down email, internet access and major elements of its computer network to stop further damage.

For nearly a month, employees couldn’t use electronic health records, payroll programs and other digital tools. Many surgeries had to be rescheduled, and cancer patients had go elsewhere for treatment. The center did not pay a ransom, but it was estimated that the attack cost the medical center about $50 million.

How Health Care Systems Can Cope

To deal with the potential of a ransomware or cyberattack in the health care space, Pass recommends insureds have three types of insurance in place: medical malpractice, tech E&O and cyber.

“That’s the way to absolutely protect yourself in the event of a claim and truly leave no gaps,” he said.

With cybersecurity under threat, he said insureds can also expect costs to go up.

“Premiums are going to continue to increase,” he said. “That’s due to the severity of the claims we’re seeing.”

Some steps hospitals can take to protect themselves from cybercriminals include:

Strong firewalls and frequent updating of antivirus software
Save three copies of all critical data in at least two different formats and storing one copy offline, out of reach of malicious code — advice taken from a joint cybersecurity advisory co-authored by the Cybersecurity and Infrastructure Security Agency (CISA) and the FBI
Segmentation, which involves dividing networks into smaller sections which enables ransomware to be limited to one segment rather than shutting the whole network down
Train employees to be aware of the importance of maintaining security

In addition, Pass said a broker can help an insured understand their insurance needs and improve their cybersecurity.

“All of the information is there,” he said. “It’s on the insured and their broker to make sure they are aware of the risk management tools and different coverages that are offered.” &

Annemarie Mannion is a freelance writer. She can be reached at [email protected].

How a Carrier Partner Can Help Navigate a Challenging Management and Professional Liability Market

A combination of a choppy economy with increased claims frequency and severity could lead to rate increases in the Management & Professional Liability market.

By: Risk & Insurance | April 3, 2024

Rates in the management & professional liability (M&PL) markets were on the rise from 2020 to early 2023 and are now falling rapidly.

M&PL divisions manage a number of different insurance products including management liability (D&O), professional liability (E&O), employment practices liability (EPL), fiduciary liability policies, cyber, etc. In 2023 and into 2024, a big influence on the marketplace has been the extremely aggressive and softening public company D&O market.

Though these rates have been softening for management liability, that may change over the next few years as companies continue to adjust their business models motivated by economic uncertainty. Layoffs were up nearly 200% last year, Forbes reported, even as other recession indicators, like the inflation rate, improved. A recession could lead to an increased claim activity and force carriers to raise rates.

“Whenever there is a meaningful downturn in the economy, we tend to see claim frequency pop up,” said George Schalick, Jr., senior vice president of the Management and Professional Liability Division at Philadelphia Insurance Companies (PHLY).

With continued fiscal uncertainty, businesses potentially already burdened with pandemic-related claims should seek a carrier with a long history in M&PL products. They will provide much-needed risk management guidance and be better positioned to support their insureds during market fluctuations.

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.