Medical Professional Liability Rates Surge in 2025: Marsh Report

The medical professional liability market continues to face challenges in 2025. As per a recent report from Marsh, rates doubled in the first half of the year, signaling continuous financial pressure for hospitals, physicians, and healthcare organizations.  

While the insurance market has been under strain for years, the current environment shows a bit of relief for buyers. Even as new insurers enter, capacity is not keeping up with the demand, leaving healthcare providers with minimal options.  

Hospitals Hit Hardest in Medical Professional Liability Rates

Hospitals remain the most affected sector, and as per Marsh’s report:  

• 45% of hospitals experienced increases between 10% and 25%. 
• 10% of hospitals saw even steeper hikes, ranging from 25% to 50%. 

These rising medical professional liability rates are being driven by higher claims severity, ongoing litigation, and the overall risk profile associated with hospital systems. For the hospitals that are already under financial strain, especially the smaller and independent ones, these increases could be complicated to absorb. 

New Insurers Enter the Market, But Capacity Still Lags 

The report also highlights the entry of new players, including Tokio Marine HCC, into the medical professional liability space. However, this additional capacity is not enough to make up for the insurers that have exited the market or those scaling back their exposure. As a result, rates remain high, and competition among carriers is still limited.  

Other Healthcare Lines See Relief 

A fascinating insight from the report shows that not all insurance lines for healthcare organizations are experiencing the same upward trend. The report claims: 

• Directors and Officers (D&O) liability rates decreased by 2%. 
• Property insurance rates fell by 9% in the first half of 2025. 

These decreases show a more favorable trend in certain areas, even though they are not enough to offset the overall financial challenges created by rising medical professional liability costs.  

What Healthcare Organizations Should Do Next 

With the ongoing volatility, hospitals and healthcare providers should: 

• Start renewal discussions early to explore all available market options. 
• Review risk management practices to demonstrate proactive steps that may appeal to underwriters. 
• Consider alternative structures, such as captives, to manage long-term insurance costs. 

The key takeaway remains clear: while some relief may exist in other lines, medical professional liability remains one of the toughest challenges in healthcare risk management today.