CNA cuts part of medmal portfolio as loss trends exceed rate increases
CNA reduced the amount of medical malpractice it writes in the third quarter as it saw loss trends exceed possible rate increases on a proportion of its portfolio.
Speaking on an analyst call to discuss the carrier’s Q3 results, CEO Dino Robusto said the company in general remains “committed to medical malpractice”.
On a portion of its medmal portfolio, however, Robusto said pricing could not keep pace with loss trends.
“Over the last few years with the impact of, in particular, social inflation, we talked about how it increased our loss cost trends,” the executive said.
“We started a process of getting rate increases well before anyone else did, and we've been making some excellent headway.”
A presentation accompanying the earnings release revealed that the carrier has achieved double-digit rate increases on its medmal portfolio since at least Q1 2020, but that, in the past two quarters, this has declined, at 18% in Q1 this year to 13% in Q2 and 8% in Q3.
Robusto said: “There was a portion of the hospital portfolio, an excess liability portion, that we just didn't see an ability to be able to get the required return as well as some of the others.
“A good portion of it, because of how it's written, came up in [Q3], and we just decided we were going to non-renew it.”
The medical malpractice retention rate dropped from 72% in Q2 to 62% in Q3.
Elsewhere, Robusto predicted “very favorable” market conditions in 2022.
“We continue to build momentum in new business growth and retention,” he said.
“Rate increases should remain above long-run loss cost trends for most of 2022, in light of the headwinds of social inflation, elevated cat activity, low interest rates and the additional headwind of economic inflation emanating from protracted supply chain dynamics.”
He added that although pricing has reduced after the “high watermark” of Q4 2020, it is “premature to assume it will continue down on a straight line due to the uncertainty of the strength of headwinds”.