In all sectors – from eggs on the grocery store shelves, car repair costs, mortgage rates and what it costs to see your doctor – Americans everywhere are experiencing higher prices on goods and services. Like people, businesses are also seeing their costs rise. One place that’s being acutely felt is in the medical space, where providers are facing cost pressures from all angles that are impacting their ability to provide high-quality care (while reimbursement is simultaneously declining!). 

For many doctors, they’ve seen a steep rise in medical malpractice insurance premiums, which is typically the second largest cost for providers after payroll. In fact, insurance premiums for physicians have increased 11% annually for 70% of providers since 2022 due to a rise in nuclear verdicts post Covid and escalating legal expenses. While large awards may provide necessary compensation for victims of malpractice, they can also significantly strain the healthcare system, increase insurance costs, and potentially limit access to care. We’re asking providers to deliver high-quality care while slamming them with incredibly high premiums – so the question is: why have so many areas of healthcare seen innovation and change but not this one?

We live in a digital age and rely on technology to drive efficiency and convenience in just about every aspect of our lives. However, for those applying for medical malpractice insurance, the process feels more 1980 and less 2025. To receive a quote, providers must fill out 15+ page applications, send the documents to their medical malpractice insurance broker, and then are left waiting days or even weeks for a quote. In addition, carriers traditionally evaluate providers on their specialty, geography and claims history. But just like the stock market, past results are not always indicative of the future and some providers get banded into a price range higher than their true future risk. 

The promise of AI 

Over the past few years, AI has grown tremendously in popularity and accessibility, driving efficiencies across a variety of industries, and the medical malpractice insurance industry is ripe for AI disruption. While it will always be important to have a level of human oversight in the insurance underwriting process, utilizing the power of AI to quickly synthesize publicly available socio-economic data, healthcare claims and other risk factors, creates more accurate risk segmentation. Pulling in more data sources, compared to those used in the traditional quote process, drives better and more affordable quotes for providers, and this is only possible with AI tools that can do this in real time.

For example, in traditional medical malpractice insurance underwriting, a cardiologist that performs surgery is usually viewed as riskier than one who does not. However, the data tells you otherwise depending on what activities the non-surgeon is actually performing. On the other hand, family doctors are usually perceived to be low risk by insurers, but with the rise of opioids, we often see that primary care physicians who prescribe these narcotics more often than average are more likely to experience a future claim. Traditional underwriting still takes a very surface level approach, while AI tools enable underwriters to easily and quickly dig into vast amounts of data that provide a more comprehensive, accurate picture of what type of risk we can expect to see from a provider. 

To a legacy insurance carrier, ten primary care physicians at the same office location look largely identical. However, the reality is that each doctor has a unique alternative data footprint that may materially impact their future medical malpractice claim risk. The ability to customize pricing and coverage at the individual level has the potential to dramatically reduce premiums for the least risky physicians. 

Meeting the needs of providers of the future

As the medical malpractice landscape continues to evolve, we’re seeing providers being met with new sources of risk, and innovation will be key to closing these coverage gaps. With the rise of new digital health tools that are integrated into clinical workflows, like telehealth and AI chatbots, also comes increased risk for providers. A recent survey from QBE found that despite the benefits of digital health tools, 63% of brokers report their clients are “extremely concerned” or “very concerned” about the associated risks. The survey also found that 60% of brokers report that the volume of clients’ digital health services-related claims has increased compared to a year ago. These modern challenges require a modern approach, and medical malpractice insurers must leverage AI and other technologies to help providers and brokers keep up with changes in the industry and better manage risk.

The status quo for medical malpractice insurance is no longer good enough. While we must always prioritize the need for accountability when it comes to medical malpractice, we must also consider how challenges like increased premiums, rising costs and new risks are impacting providers and consequentially patients. AI can tame the costs of medical malpractice premiums and increase efficiencies, helping to support providers that practice good medicine so that they can focus on what matters – providing high-quality patient care.

Photo: tonefotografia, Getty Images

Jared Kaplan is CEO and Co-Founder of Indigo – an AI-powered insurtech platform for medical malpractice insurance. Jared has served in executive roles at several private equity-backed fintech companies prior to founding Indigo.‍ Most recently, he was CEO of Cadre, a tech platform facilitating access to commercial real estate investment. Previously, he was CEO of OppFi (NYSE: OPFI), an AI lending platform powering community banks, and Co-Founder & EVP of Insureon, the leading online agency for small business insurance. Jared also led financial services investing for Accretive, an early-stage private equity firm. He began his career as an Analyst at Goldman Sachs and holds a BBA from the University of Michigan.

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