Mutual Matters: Understanding Liability from Environmental Risks

MagMutual PolicyOwners: 

For healthcare leaders and physicians, the current medical malpractice landscape presents a confusing paradox. On one hand, the total number of claims filed nationally has generally declined or stabilized over the past decade. On the other hand, the cost to resolve those claims—whether through settlement or verdict—is climbing at an alarming rate.

This divergence between frequency (how often providers are sued) and severity (how much it costs when they are) is creating a volatile environment. Relying on national averages to predict your specific liability risk is no longer sufficient.

The legal, judicial and legislative climate in your state plays a critical role in determining both the likelihood and the financial consequences of malpractice claims. For example, legislative outcomes influenced by active lobbying from plaintiff attorneys—such as efforts to increase non-economic damage caps or to resist physician-supported reforms—can substantially increase your exposure to large verdicts and settlements. Understanding these state-specific dynamics provides the clarity and insight needed to anticipate changes in liability risk, strengthen your risk management strategies and make well-informed decisions to protect your practice and financial future. 

At MagMutual, we analyze data from more than 200,000 claims, to help PolicyOwners anticipate risk rather than simply react to it. Let's look at what the current data tells us about the shifting risk environment and why local insights matter more than ever.

The Drivers Behind Rising Severity

The improvements in healthcare practices, such as the implementation of patient safety programs, standardized care protocols and advancements in technology like electronic health records, have helped reduce the overall number of claims. Yet, despite these advancements, the severity of claims continues to rise. This paradox is largely driven by social inflation—a trend where rising litigation costs, broader definitions of liability and shifting jury sentiment leads to significantly higher payouts. 

Several factors contribute to this rise in severity:

• Attorney Selectivity: Plaintiff attorneys often focus on cases with the highest potential for financial return, prioritizing those that are more likely to result in significant payouts. This selectivity can drive trends in litigation and contribute to the perception that massive awards are the norm in medical malpractice cases.
• Desensitization to Large Numbers: In an era of billion-dollar corporate valuations and lottery jackpots, juries have become desensitized to large figures. Verdicts that were once considered outliers—often called "nuclear verdicts" exceeding $10 million—are becoming more common.
• Aggressive Advertising: The volume of advertising by plaintiff firms creates a perception among the public that adverse medical outcomes are always the result of negligence. This narrative can unintentionally oversimplify complex medical situations, leading to heightened expectations of financial compensation and a skewed understanding of the challenges healthcare providers face.

Why National Trends May Not Reflect Local Risk

While social inflation is a national trend, its impact is not felt equally across state lines. Relying on national medical malpractice statistics to make local decisions can leave you either underinsured or over-prepared for the wrong risks. 

MagMutual’s Risk Environment Reports reveal that local legislative and judicial nuances create distinct pockets of volatility.

Contrasting Risk Profiles

Consider the contrast between Alabama and Indiana. While many states are seeing a plateau in claim counts, data indicates Alabama has experienced pockets of rising claim frequency, requiring providers there to be more vigilant regarding patient interaction and documentation. Conversely, Indiana has maintained a more stable risk environment, supported by consistent legislative and regulatory frameworks. 

Relying on a national average can lead to coverage that doesn’t reflect local realities—leaving you mismatched to risk in stable regions or inadequately protected in more volatile ones

The Impact of Legislation

State-specific legislation is perhaps the single biggest variable in your risk equation. Two recent examples highlight how quickly the ground can shift:

• Colorado: For years, Colorado was considered a relatively stable environment due to firmly established caps on damages. However, the signing of HB24-1472 significantly alters this landscape. Since Jan. 1, 2025, the cap on non-economic damages has increased and will incrementally continue to do so over five years, drastically changing the potential settlement values for claims filed in the state. Advocacy efforts from groups aligned with plaintiffs played a key role in shaping this legislation, highlighting their growing influence on legal outcomes.
• Florida: In 2023, Florida enacted major tort reform (HB 837) aimed at curbing lawsuit abuse and stabilizing the insurance market. While this is positive for providers in the long term, major legislative changes often create short-term volatility as plaintiff attorneys rush to file suits before new laws take effect, test the boundaries of new statutes in court or as seen in 2025, attempt to overturn reforms like HB 837—an effort that was ultimately unsuccessful.

The Provider Perspective: Navigating Uncertainty

Having worked as an emergency medicine physician, I know the disconnect between clinical care and legal risk can be a source of significant anxiety for frontline providers. This uncertainty is often the most difficult part of practicing medicine. 

As healthcare providers, we are trained to pursue certainty in every decision that affects a patient’s well-being. But when it comes to protecting our own practices, the process is often anything but clear. Buying liability insurance can feel like operating in the dark. 

MagMutual's tools like OneModel® and Risk Environment Reports are designed to turn the lights on. By translating complex actuarial data into clear, state-specific insights, providers can stop guessing about their risk and start making evidence-based decisions about their protection.

Turning Insight into Action

Understanding that severity is rising is only the first step. To mitigate these risks, healthcare providers and organizations should take specific actions based on their local environment.

1. Review Coverage Limits

Inflation applies to liability judgments just as it applies to consumer goods. A policy limit of $1 million that was sufficient 10 years ago may leave a practice exposed today, particularly in states like Colorado where damage caps are increasing. Use your Risk Environment Report to see how your coverage aligns with loss trends for your specialty and region. Additionally, OneModel provides a clearer picture of how your insurance coverage limits protect you in today’s evolving risk environment.

2. Reinforce Patient Safety Initiatives

MagMutual’s data shows a strong correlation between education and loss reduction. From our analysis, PolicyOwners who engage with four or more risk mitigation courses can see a reduction in malpractice losses of up to 20%. If your Risk Environment Report indicates a rise in claims, mitigate the risk you can control. The Learning Center can direct your team to specific resources to address that vulnerability.

3. Request Your Report

You cannot manage a risk you do not understand. MagMutual provides detailed Risk Environment Reports that break down frequency and severity trends, legislative changes and projected outlooks for your location.

The Future of Risk Management

The era of one-size-fits-all risk management is over. In a landscape where claim frequency is stabilizing but severity is skyrocketing, the difference between adequate protection and catastrophic exposure lies in the details. 

MagMutual is dedicated to providing the proactive protection and personalized guidance necessary to navigate these changes. We encourage all PolicyOwners to look beyond the national headlines and understand the reality on the ground in their own state. 

Take a look at your risk mitigation strategies and keep an eye out for your Risk Environment Report. 

Sincerely,  
Bill Kanich, MD, JD