It remains a challenging environment for Australian Healthcare Professional Liability (HPL) insurers, driven by pressure on expanded claims tails, the length of time taken for cases to close, and increases in the frequency and severity of cases.
At a glance
Established insurers remain selective in how they deploy capacity.
Claims inflation is putting pressure on attachment points.
Future care costs remain a significant consideration in catastrophic claims.
Underwriters are looking beyond accreditation to how clinical governance operates in practice.
Programme structure and the level of retained risk remain important considerations.
What we're seeing at renewal
Buyer experience | Primary layers | Excess layers |
|---|---|---|
Loss-free | Around 5–20% increases | Around 7.5–40% increases |
Losses incurred to the layer of insurance | 10–25% or more; higher attachments may apply | 20–40% or more; restricted drop-down may apply |
Source: Lockton market engagement. Indicative only. Actual renewal outcomes will vary according to claims experience, attachment point, limits, service profile, risk controls, programme structure and market conditions at the time of placement.
Capacity remains selective as claims costs rise
The Healthcare Professional Liability (HPL) insurance market combines traditional long-term writers of HPL insurance with a smaller number of underwriters whose experience has previously focused on other international territories, such as the UK or US, and who are exploring Australian opportunities.
Established insurers are deploying capacity more selectively, seeking higher attachment points and scrutinising underwriting decisions.
Based on Lockton’s recent market engagement, AXA XL, HDI Global and Arch London have provided additional capacity, particularly for excess layers. However, this has not fully offset reductions from some established HPL insurers.
Insurers are also taking a cautious approach to policy wording, terms and conditions, including sexual abuse exclusions and tighter treatment of exclusion carve-backs for cyber and technology risks or pandemics.
Markets are taking a similarly cautious approach to aggregated self-insured retentions and reinstatements.
Large vertical limits and extensive sideways aggregate protection are under scrutiny as traditional markets become more conservative with line size.
Obstetric and paediatric exposures attract particular attention because claims may develop over many years and involve substantial future care costs. Medical care and legal costs can develop above general CPI.
Underwriters are increasingly modelling these cost components separately rather than applying a single inflation assumption across all claims.
The impact of inflation has also been particularly relevant to lower-threshold losses, increasing the frequency of losses that threaten attachment points.
Stewart and future care costs
Stewart v Metro North Hospital and Health Service [2025] HCA 34 is relevant to the potential cost of catastrophic injury claims involving future care.
The High Court rejected an approach that primarily balanced the additional cost of home care against the additional health benefits of home care over institutional care.
Reasonableness must account for the injured person’s circumstances, including quality of life and family connections. The decision does not create an unrestricted entitlement to any preferred care arrangement.
The Stewart decision may increase the potential cost of catastrophic injury claims involving future care.
Insurers and insureds should consider early expert assessment of future care requirements, realistic quantum analysis and, where appropriate, structured settlement options. Early intervention may support better outcomes for the injured person and more informed settlement decisions.
Looking beyond conventional program structures
Rather than defaulting to conventional program structures or simply accepting higher per-claim retentions, Lockton looks for alternative creative ways to structure the risk that balance the level of risk retained by the Insured with the cost and extent of insurance protection.
Inner aggregate deductibles
Insured or retained buffer layers
Second or third loss protection
Swing-rated programs
Additional aggregate capacity
These structures are not standardised. Their value depends on the definitions, attachment points and exhaustion provisions negotiated.
A low initial retention can still leave substantial cumulative exposure and place a greater level of predictable losses within the risk-transfer component of the program.
This could affect the total cost of risk financing, comprising the premium paid and the funding required to retain risk.
A more strategic approach to attaching risk transfer at the point of optimum pricing competitiveness can lead to an overall reduction in the total cost of risk financing.
Insureds can expect to see increases to aggregated self-insured retentions, with some larger systems being directed towards each-and-every-loss structures.
Clinical governance and underwriting focus
For higher-risk services, underwriters are increasingly focused on how clinical governance and risk controls operate in practice, rather than relying on accreditation alone.
What underwriters are looking for
High-risk clinical services: For obstetrics and other higher-risk services, underwriters are looking at controls around competency, consultant availability, escalation, emergency intervention, neonatal support and multidisciplinary simulation.
Credentialling and ongoing assurance: Underwriters want evidence that registration, competence, scope of practice and professional indemnity are actively monitored, particularly for practitioners operating under defined scopes of practice.
Clinical records and AI: Records should provide clear evidence of assessment, clinical decision-making, consent, escalation and follow-up. The use of AI within clinical workflows also introduces governance considerations that underwriters will increasingly need to understand.
Safeguarding and informed consent: Underwriters are considering governance and controls around safeguarding, chaperones, informed consent, incident reporting and escalation, particularly where failures in these processes can result in claims.
Systemic and supplier-related exposures: Insurers are looking at how organisations manage risks that could affect multiple patients or locations, including equipment, technology and third-party suppliers, and how contractual and insurance arrangements respond.
Underwriters increasingly want evidence that risk controls are not only in place, but are working in practice.
Demonstrating that controls are working
Underwriters are seeking measurable evidence that clinical improvement initiatives are addressing an organisation’s principal sources of harm.
This includes evidence of implementation, outcomes, sustainability and any unresolved issues.
For higher-risk services, this may include evidence showing how initiatives such as multidisciplinary simulation, clinical competency programs and other quality improvements are translating into measurable clinical outcomes.
Claims experience and organisational change
Claims and loss development
Healthcare providers should be able to give underwriters a clear view of how their claims experience is developing.
This includes distinguishing between incident, notification and closure years, as well as damages and legal costs, paid amounts and reserves, and any changes in reserving practice.
Claims should also be considered alongside complaints, near misses, audit exceptions and corrective actions.
Taken together, this information can help underwriters understand where risks are emerging, what action has been taken and whether that action has been effective.
Acquisitions and organisational change
Acquisitions and the integration of new facilities can introduce different clinical practices, governance arrangements, operating models and loss histories.
Underwriters will want to understand how these exposures are being identified and integrated, and whether clinical governance, credentialling, incident reporting, escalation and other risk controls operate consistently across the enlarged organisation.
What this means for healthcare organisations
Insurers recognise that clinical improvement, effective enterprise risk management, proactive defence of claims and demonstrated progress across relevant clinical quality initiatives can help offset broader market headwinds.
Healthcare organisations that can provide underwriters with relevant data and a clear view of their claims experience, clinical governance, risk controls and actions taken in response to emerging issues can support a stronger renewal presentation and more informed discussions with existing and prospective markets.
How Lockton can help
These are only a handful of the themes affecting the HPL market in Australia.
Our specialist Healthcare & Community team works with healthcare organisations to understand their changing risk profile, strengthen the information presented to insurers and consider insurance program structures that reflect the risks being retained and transferred.
If you would like to understand how the changing HPL market may affect your organisation and explore opportunities to strengthen your approach to risk and insurance, please get in touch with our specialist Healthcare & Community team.
The contents of this publication are provided for general information only. Lockton arranges the insurance and is not the insurer. While the content contributors have taken reasonable care in compiling the information presented, we do not warrant that the information is correct. The contents of this publication are not intended as a legal commentary or advice and should not be relied on in that way. It is not intended to be interpreted as advice on which you should rely and may not necessarily be suitable for you. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication.
