Claims frequency, severity on the rise

Claims frequency has been rising slightly, which contrasts to the past few years in which claims frequency had declined or stabilized, according to the sixth annual benchmarking report on professional liability claims trends in the hospital industry from Zurich, a property and casualty insurance provider based in Schaumberg, IL.

The report also finds that claims severity continues to rise. Between 2002 and 2008, severity rates rose 6.3% per year. (For the full report, go to

Illinois, New York, and Pennsylvania continue to have the highest severity, the report says. But although the difference in severity between "all states" and the three states with highest severity is relatively stable, their severities are moving closer together. Illinois, which has the highest severity of the states shown for eight out of 11 years, actually has a flat annual trend from 2002 to 2008.

New York, another high severity state, has an annualized average trend of just 3.9%. This number is 2.4% lower than the national average. Pennsylvania has the highest annual trend of the states shown at more than 10% from 2002 to 2008. While severity has moderated somewhat in the high severity states, the other states have seen relatively greater increases in severity.

Other highlights of the study included:

• Differences in claims severity trends between different types of organizations narrow.

In the past, non-profit hospitals have seen considerably lower severity rates than for-profit hospitals. Now, non-profit hospitals have higher claim severity than for-profit organizations.

• Comparing faith-based and non-profit healthcare organizations.

The report reviewed loss cost, frequency, and severity. Overall, loss costs for faith-based and non-profit organizations are similar. But the report finds that frequency rates are higher in faith-based organizations, while severity rates are lower.

• Claims severity by facility type.

The report compared acute care, children's hospitals, teaching hospitals, and outpatient facilities. Teaching hospitals are defined as those that are part of academic institutions or sponsor resident education programs. Children's hospitals continue to have the highest severity over time. This difference likely is due to the high costs of providing medical care over the child's lifetime, the report says. Teaching hospitals contribute significantly to overall severity.