The American Medical Association published its annual premium analysis on May 4, 2026, finding that 39.9% of reported medical liability premiums rose in 2025. That is the seventh consecutive year of increases and the highest share since 2005, when 65.5% of premiums climbed during the last hard market cycle.
Eleven states reported at least one specialty premium increasing by 10% or more. Pennsylvania led at 52.9%, followed by Rhode Island (25%), Kansas (25%), Utah (25%), South Carolina (20%), Kentucky (20%), and Florida (19%). Georgia, Illinois, West Virginia, and New York rounded out the list at lower thresholds.
Who it affects
Self-insured hospitals and health systems carrying professional liability through a captive or large deductible. OB programs face the steepest exposure: Florida OB-GYN and general surgery premiums reached $243,988 in 2025, roughly four times the $59,736 that internists in the same state pay. Any hospital system operating in one of the 11 double-digit states should treat the insured-market signal as a calibration check on its own retained severity assumptions.
The reserve mechanism: severity outrunning frequency
The premium trend confirms that claim severity, not frequency, is driving the cycle. Only 1.8% of physicians reported a malpractice lawsuit in 2024, down from 5% in 2007-2008 and 7.4% in 1991-2005. Yet premiums keep climbing because the average indemnity payment per closed claim continues to rise faster than frequency declines offset it.
For a hospital captive, this means the severity trend selection in the most recent reserve study may already be stale. If the actuary picked a 4% to 5% annual severity trend while insured-market premiums in your state jumped 10% or more, the gap deserves an explanation, whether it reflects differences in retention layers, specialty mix, or an assumption that needs updating.
Kansas illustrates the cap-removal effect
Kansas lost its $250,000 noneconomic damages cap in 2019. Six years later, a quarter of Kansas premiums show double-digit increases and three-quarters show some increase. Two Kansas City-area hospitals closed maternity programs: Providence Medical Center in June 2024 and Research Medical Center in September 2025. States in the Patient Compensation Fund system (Kansas is one of six) saw sharper premium growth than non-PCF states because the surcharge amplifies base-rate movements.
The Georgia Supreme Court is expected to rule by July 2026 on whether to revive that state’s $350,000 cap. A decision against reinstatement would put Georgia on the same trajectory.
What this means for your next review
Ask your captive actuary whether the severity trend selected for hospital professional liability reflects the double-digit premium hikes in your operating states. Compare your program’s paid severity development over the last three accident years against the rate increases the insured market is absorbing. If your captive operates in a state that recently lost or weakened a damages cap, confirm that a jurisdiction-specific severity uplift is in the model, not just a blended national trend.