Is the Storm Coming from the East? Peter Jeurissen, ECCLESIA Group, Detmold

Medical Liability Insurance for Hospitals Agenda Medical Liability Insurance for Hospitals Professional Liability Insurance for Midwives The German Patients‘ Rights Act PIP Scandal – Liability for Medical Products Peter Jeurissen ECCLESIA Group, Detmold

Medical Liability Insurance for Hospitals Situation of medical liability insurance for hospitals in Germany since 2010 Major increase in premiums by Insurers Exit of a number of Insurers from the market Only 5 Insurers left who underwrite this risk Peter Jeurissen ECCLESIA Group, Detmold

Medical Liability Insurance for Hospitals Principal reason for premium increases: High increase in claims expenditure for severe bodily injuries caused by: - significantly improved life expectance. - increasing care expenses. - increased loss of earning capacity. Insurers have not sufficiently considered these factors in the past. This has been adjusted now. Peter Jeurissen ECCLESIA Group, Detmold

Medical Liability Insurance for Hospitals What impacts do the factors mentioned on slide 4 have on: the total expenditure for severe bodily injury claims? the assessment of final expenditure of such claims and appraisal in the year of occurrence? the significance of severe bodily injuries? Peter Jeurissen ECCLESIA Gruppe, Detmold

Medical Liability Insurance for Hospitals Impact on the total expenditure using the example of severe bodily injuries in obstetrics Strong increase in expenditure for severe bodily injuries in obstetrics. While the average claims expenditure for a bodily injury in obstetrics amounted to approx. EUR 1.4 millions in the reporting period 1995-1998, expenditure for claims arising in the reporting period 2000-2003 increased to approx. EUR 2.2 millions. Peter Jeurissen ECCLESIA Gruppe, Detmold

Medical Liability Insurance for Hospitals Impact on the total expenditure using the example of severe bodily injuries (all medical areas) Expenditure likewise increased. While the average claims expenditure for a bodily injury amounted to approx. EUR 1.33 millions in the reporting period 1995-1998, expenditure for claims arising in the reporting period 2000-2003 increased to approx. EUR 1.76 millions. Peter Jeurissen ECCLESIA Gruppe, Detmold

Medical Liability Insurance for Hospitals Impacts for assessing final expenditure Since 1987, the Ecclesia Group has recorded systematically structural data, benefits data and claims data of hospitals. The objective of this compilation of data is to observe the development of a representative data base in the long term. Peter Jeurissen ECCLESIA Gruppe, Detmold

Medical Liability Insurance for Hospitals Even 22 years after the year of occurrence the final expenditure has not yet been determined (cf. slide 10). Since 1987, loss reserves have never been sufficient to enable claims payments thereof. The total expenditure of any year of occurrence has increased steadily during settlement. Reasons: Incurred losses but not reported (IBNR). Incurred losses but not enough reserved (IBNER). Peter Jeurissen ECCLESIA Gruppe, Detmold

Herausforderungen der Schadenentwicklung Claims Development Years of Occurrence 1987 to 1991 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 70,0% 80,0% 90,0% 100,0% 110,0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 relative insurance year Payments Reserves Peter Jeurissen ECCLESIA Gruppe, Detmold

Medical Liability Insurance for Hospitals Significance of severe bodily injuries for the total expenditure for medical malpractice claims The total expenditure for medical malpractice claims is strongly affected by severe bodily injury claims. (cf. slides 12 and 13). Peter Jeurissen ECCLESIA Gruppe, Detmold

Significance of Severe Bodily Injuries Example: Reporting years 1996 to 2006 by size class 98.8% 1.2% Allocation of claims number up to 200,000 Euros more than 200,000 Euros 36.0% 64.0% Allocation of claims expenditure to claims up to 200.000 Euros Peter Jeurissen ECCLESIA Gruppe, Detmold

Bedeutung schwerer Personenschäden Significance of Severe Bodily Injuries Example: 100 major claims of the reporting years 1987 to 2006 Share of the total number (100 of 74,763 claims) and total expenditure (230 of 835 million Euros) 99.9% 0.1% Allocation of claims number all other claims Top 100 72.4% 27.6% Allocation of claims expenditure to claims Peter Jeurissen ECCLESIA Gruppe, Detmold

Medical Liability Insurance for Hospitals Approaches to solving this difficult situation Increased implementation of deductible models. Consistent introduction of risk management. Adequate consideration of risk costs. Prohibition of recourse for any statutory social insurance institutions. Reduction of insurance tax. Peter Jeurissen ECCLESIA Group, Detmold

Medical Liability Insurance for Hospitals Future prospects: Premiums will continue to increase in the medium to long term. Insurers will now – conscious of the situation – examine at brief intervals this segment for any chances. Automatic adjustment clauses will have been re-instated. Since premium levels have made up some leeway over the past two years, such a big hole will not emerge a second time. Peter Jeurissen ECCLESIA Group, Detmold

Professional liability insurance for midwives Situation of professional liability insurance for freelance midwives in obstetrics Premiums have almost quadrupled over the last 10 years. In 2015, one Insurer will exit the hitherto existing syndicate of underwriters. In case that the two remaining Insurers do not take over his shares, this may cause the loss of professional liability insurance from mid-2015. Since midwives are obliged by their Rules of Professional Practice to maintain professional liability insurance cover, they may face the end in obstetrics. Peter Jeurissen ECCLESIA Group, Detmold

Professional liability insurance for midwives Reason for this situation: High increase in claims expenditure for severe bodily injuries in obstetrics caused by: - significantly improved life expectance - increasing care expenses - increased loss of earning capacity The same reason as with hospitals (cf. slide 4). Peter Jeurissen ECCLESIA Group, Detmold

Professional liability insurance for midwives Solution approach of German statutory health Insurers (brought into force on July 1, 2014 until June 30, 2015): Payment of a balancing subsidy in connection with professional liability insurance premiums for midwives with respect to obstetrics. - Per home birth: plus € 132. - Per birth in a birth center: plus € 68. - Attending midwife with hospital affiliation per birth: plus € 8.81 Peter Jeurissen ECCLESIA Group, Detmold

Professional liability insurance for midwives Solution approach of German statutory health Insurers (Starting mid-2015): Individual service guarantee incentive in form of bonuses. - It is intended to be based on the number of births attended. - Quality issues are to play a significant role. - Details remain to be negotiated. Peter Jeurissen ECCLESIA Group, Detmold

Professional liability insurance for midwives Further possible solution approaches: Adjustment of the individual premium. Limitation of costs recoverable by any statutory social insurance institutions. Setting up a medical indemnity fund. The German Association of midwives DHV has been requesting for years to turn the vocational training of midwives into an academic profession, as is the case in 24 of 28 EU-countries. Peter Jeurissen ECCLESIA Group, Detmold

The German Patients‘ Rights Act Primary objectives of the Patients‘ Rights Act which came into force on February 26, 2013 Transparency on existing rights (historically, medical liability law was based on case law, and was not legally standardized in a legislative framework). This act is designed to improving the enforcement of rights for the patient. Peter Jeurissen ECCLESIA Group, Detmold

The German Patients‘ Rights Act Impacts of the Patients‘ Rights Act on the liability situation of physicians There are not yet any higher court judgments on the basis of which this law could have had any effect. These new regulations are not expected to have a significant impact on the German medical malpractice law. The case law which has been developed over decades, was merely given a legislative framework. In particular, there are no amendments to previously applicable rules on the burden of proof (the patient bears the burden of proof), and tighter liability provisions for physicians have not been set-up. Peter Jeurissen ECCLESIA Group, Detmold

PIP Scandal – Liability for Medical Products PIP Scandal – German Technical Inspection Authority TÜV Rheinland found to be liable in France At the end of 2013, TÜV Rheinland was ordered by the French Commercial Court of Toulon to pay indemnity because this German technical inspection authority certified the manufacturing processes of the French company Poly Implant Prothèse (PIP). The Court granted compensation in the amount of EUR 3,000 to each of the applicant women. This judgement has not yet become effective, and has been appealed against. Motivated by this French judgement, many women and one German statutory health insurer (AOK Bayern) filed lawsuits against TÜV Rheinland in Germany and claimed indemnification for the damage occurred. Peter Jeurissen ECCLESIA Group, Detmold

PIP Scandal – Liability for Medical Products Liability to be decided by the German Federal Supreme Court All claims against TÜV Rheinland were dismissed by several German Courts. According to the judges, TÜV Rheinland was not able to detect the fraudulent actions committed by PIP with the resources that are legitimately available to a private body or designated authority. The TÜV-Certification only concerned the manufacturing process and quality assurance, but not nature and quality of the product itself. TÜV Rheinland was not found liable to compensation, neither in contract nor tort. One appeal against such court decisions has now reached the German Federal Supreme Court BGH. The BGH has not yet fixed a court date. Peter Jeurissen ECCLESIA Group, Detmold

PIP Scandal – Liability for Medical Products PIP Scandal – Claims against physicians involved? The consumer association Verbraucherzentrale Hamburg believes that victims will have problems with compensation claims, because the manufacturer has gone bankrupt, and the French State is not responsible. It deems that claims against physicians involved on the basis of inadequate patient information concerning risks have little prospect of success, because physicians relied on the certification of TÜV Rheinland. Peter Jeurissen ECCLESIA Group, Detmold

THANK YOU Peter Jeurissen ECCLESIA Group, Detmold