Inflation and large verdicts have significantly increased medical malpractice insurance costs.
Inflation has touched nearly every corner of the economy, and new research shows the medical malpractice insurance market is no exception. A report from The Doctors Company, the largest physician-owned malpractice insurer in the country, finds that inflation has added about $4 billion in insured losses and expenses over the past decade. The study points to both economic pressures, such as rising costs in general, and social factors, like larger jury awards, as the reasons behind this steep increase.
According to the research, which analyzed data through the end of 2024, the $4 billion figure represents around 11 percent of all malpractice losses recorded over the ten-year period. Just one year ago, the company’s earlier study had estimated the number between $2.4 and $3.5 billion. The new findings indicate not only that the problem is continuing but that it is speeding up.
One area of sharp concern is what are sometimes called nuclear verdicts—jury awards that reach into the tens of millions of dollars. The report notes that the average of the 50 largest malpractice verdicts was $32 million in 2022. That average climbed to $48 million in 2023 and then jumped to $56 million in 2024. For insurers, these amounts must be factored into premium costs. For doctors, that means higher bills to maintain malpractice coverage.
The study found that cases with payouts above $2 million have grown more than tenfold since 1990. After a brief drop during the pandemic, when many court cases were delayed, high-value claims have rebounded strongly. By 2023, the number of large verdicts was again rising, suggesting the pattern will continue.
Another factor gaining attention is third-party litigation funding. This practice allows private investors to pay the legal expenses of a lawsuit in exchange for a portion of any settlement or judgment. The report suggests that this type of outside funding could add between $13 and $25 billion in costs to the insurance industry over the next five years. Critics argue that such financing can encourage drawn-out lawsuits and increase overall expenses, while supporters say it gives plaintiffs the ability to take on cases they might not otherwise afford.
Robert E. White, Jr., president of TDC Group, said that doctors are feeling the pressure of these trends. “Physicians are facing rising premiums driven by both economic pressures and the continued increase in large settlements,” he said. White added that malpractice awards are meant to make patients whole, not to enrich attorneys or investors, and stressed the need for reforms to keep healthcare accessible.
The broader concern is how these rising costs affect both doctors and patients. When malpractice premiums climb, doctors may choose to leave certain specialties, avoid high-risk procedures, or retire early. In some communities, that can lead to fewer available doctors, longer wait times, or increased costs passed along to patients.
The report, prepared by Moore Actuarial Consulting for The Doctors Company, drew on figures from the National Practitioner Data Bank and insurance company filings. By updating its earlier findings, the company argues that the impact of inflation on malpractice insurance is larger and more persistent than many had realized.
For The Doctors Company, the findings also serve as a call to action. The insurer says it will continue to track the data, press for reforms, and work with doctors to manage the risks they face. While the company cannot control inflation or court decisions, it believes that drawing attention to these patterns is an important step toward change.
At the heart of the issue lies a difficult balance: how to fairly compensate patients who have been harmed without creating a system that drives up costs so steeply that care becomes harder to find. With billions of dollars already added to malpractice losses and outside investors entering the field, that balance is growing harder to strike.
The study makes clear that inflation is not only raising the price of food, housing, and energy but is also reshaping the legal and financial environment of healthcare. Doctors and patients alike are feeling the weight of those changes, and the ripple effects are likely to continue in the years ahead.
Sources:
Inflation Added $4 Billion to Medical Malpractice Losses, The Doctors Company Study Finds
How Inflation Is Impacting Medical Malpractice Claims
Nuclear Verdicts and Rising Costs: How Inflation is Impacting Medical Malpractice Claims
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