AMA: Medical Liability Insurance Is Broken — What Rising Malpractice Costs Mean for You in 2026
- 28.7% of U.S. physicians have been sued at least once, and medical liability insurance premiums rose for the seventh consecutive year in 2025 — the longest upward streak since 2005.
- The total U.S. malpractice liability system costs an estimated $55.6 billion per year, including claims, premiums, and defensive medicine — costs that ultimately reach patients.
- States with tort reform, like California, show significantly lower premiums, offering a real-world model for how legal policy shapes insurance costs.
- AI-driven underwriting and claims management tools are beginning to help insurers price medical liability risk more accurately, creating new pathways toward insurance savings.
What Happened
In April 2026, the American Medical Association (AMA) released two major research reports shining a harsh light on what it calls a "broken" medical liability system in the United States. The findings paint a sobering picture: as of 2024, 28.7% of U.S. physicians — nearly three in ten doctors — have been sued at least once during their career. While that figure has edged down from 34% in 2016, the liability landscape remains deeply strained.
The harder number to ignore is what's happening to insurance premiums (the regular payments doctors and hospitals make to maintain malpractice coverage). Medical liability insurance premiums rose for the seventh consecutive year in 2025, marking the most prolonged upward trend since 2005. The share of physicians experiencing year-over-year premium increases jumped sharply from 13.7% in 2018 to 39.9% in 2025. Eleven states recorded at least one premium increase of 10% or more in a single year.
AMA President Bobby Mukkamala, MD, summed it up bluntly in April 2026: "A claim does not mean a mistake was made. Most cases never find fault with the physician, and the majority are dropped or dismissed before trial. The ongoing liability risk not only challenges physicians but it increases practice expenses, reinforces defensive medical practices, and drives up health care costs for patients and families."
In 2024, 1.8% of physicians were sued in the prior year, down modestly from 2.3% in 2016 — a meaningful but insufficient decline given the sustained premium environment. Even when doctors win, and most do, the system extracts a heavy financial and emotional toll. And those costs don't stay in the courtroom. They spread throughout the entire healthcare economy, landing eventually on patients like you.
Why It Matters for Your Coverage
You might be wondering: I'm not a doctor — why should I care about malpractice insurance premiums? The answer is that this issue affects your policy coverage and healthcare costs in more ways than most people realize.
Think of it like a water balloon. When pressure builds in one part of the healthcare system — say, skyrocketing malpractice premiums — the financial squeeze doesn't stay contained. It pushes outward. Hospitals and medical practices absorb higher insurance costs, then pass a portion of those costs on through higher service fees, which in turn affects what your health insurer pays, which eventually affects your own premiums and out-of-pocket expenses. That's why an honest insurance comparison of your health plan options must account for the broader litigation environment in your state.
Here's how the numbers tell that story. The total U.S. malpractice liability system costs an estimated $55.6 billion per year when you factor in not just claims and premiums, but also "defensive medicine" — when doctors order extra tests or procedures primarily to protect themselves from lawsuits rather than because the patient medically needs them. A February 2026 study from Georgia State University found that tort reform (laws that limit the dollar amount that can be awarded in a lawsuit) saves hospitals an average of $372 per patient on defensive medicine alone. That translates to roughly $2.38 million in annual savings per hospital. Better risk assessment of actual patient needs — rather than liability fears — could meaningfully reduce what you pay.
The specialty breakdown is particularly striking for anyone who sees high-risk physicians. Among OB/GYNs (obstetricians and gynecologists who handle pregnancy and childbirth), 59.6% have been sued at least once. For general surgeons, the figure is 53.1%. And among physicians aged 55 and older — the most experienced doctors in the field — nearly three in four have faced a lawsuit, compared to only 11% of physicians under age 45. It's no coincidence that these specialties carry the highest malpractice premiums, costs that ultimately factor into any insurance comparison you make when selecting a healthcare plan or provider network.
The geographic picture matters, too. States like Pennsylvania, Kentucky, Florida, Illinois, and New York have experienced large premium increases in both 2024 and 2025, creating what insurers call "hard-market conditions" — meaning coverage is more expensive and harder to obtain. On the other end of the spectrum, California shows significantly lower premiums across insurers, largely because of a state law capping noneconomic damages (money awarded for things like pain and suffering, as opposed to actual lost wages or medical bills). That real-world insurance comparison between states illustrates how legal and policy environments directly shape what both doctors and patients pay.
AMA researchers and health policy analysts note that conventional tort reforms treat symptoms rather than root causes, and that more structural changes — such as legal "safe harbors" (legal protections) for physicians who follow evidence-based clinical guidelines — may offer more durable policy coverage stability across the system.
The AI Angle
The sustained pressure on medical liability insurers is also accelerating a shift toward AI-driven underwriting and claims management. Traditional malpractice insurance underwriting relied on blunt tools: specialty category, years in practice, and geographic location. But the AMA's data shows that risk is far more nuanced — annual claim frequency dropped from 2.3% in 2016 to 1.8% in 2024 even as premiums kept rising, a disconnect that better data analytics could help resolve.
Insurtech platforms like Gradient AI and Verisk Medical are now applying machine learning to medical liability risk assessment, analyzing procedure volumes, patient outcome records, and litigation history at the individual physician level. This granular approach to risk assessment allows insurers to price policies more fairly — potentially rewarding low-risk physicians with lower premiums rather than spreading costs broadly across an entire specialty.
On the claims management side, AI tools can flag potentially inflated or fraudulent claims earlier in the legal process, cutting settlement times and legal costs. Faster, more accurate claims management benefits everyone in the chain: insurers, physicians, and patients. If the AMA's push for evidence-based safe harbor protections gains traction, it would create structured outcome data that AI systems could use to automate future coverage decisions — opening a meaningful path toward system-wide insurance savings.
What Should You Do? 3 Action Steps
If you're choosing a health plan this year, look beyond just the monthly premium. Compare plans based on their network of providers — specifically whether your key specialists, like OB/GYNs or surgeons, are included and stable. In high-litigation states like Florida, New York, or Illinois, physician turnover driven by malpractice pressure can affect which doctors are available in your network. A licensed insurance agent can help you run a thorough insurance comparison based on your healthcare usage patterns and your state's litigation environment. Never make this decision based on price alone.
Medical liability premiums are in their seventh straight year of increases, with 11 states seeing hikes of 10% or more in a single year. Don't auto-renew without shopping the market. Ask your broker for a side-by-side policy coverage comparison across at least three carriers, and ask specifically about "occurrence" versus "claims-made" coverage (occurrence policies cover incidents that happen during the policy period even if the lawsuit is filed years later — often the more comprehensive choice for long-term risk assessment). A licensed agent who specializes in medical professional liability is essential here.
The data from California and the Georgia State University study make a compelling case: states that cap noneconomic damages see meaningfully lower malpractice premiums and less defensive medicine spending. If you live in one of the 36 states where premiums rose in 2025, learning about your state's tort reform legislation is worth your time. Patient advocacy organizations, state medical associations, and consumer groups often track these bills. Structural legal changes represent the most durable path to real insurance savings for both doctors and patients — and informed consumers can help push that conversation forward.
Frequently Asked Questions
How do rising medical malpractice insurance premiums affect my personal health insurance costs in 2026?
When doctors and hospitals pay more for malpractice coverage — and premiums have risen for seven consecutive years through 2025 — those costs often filter through the system indirectly. Providers charge higher fees, health insurers pay more in claims, and those costs can show up in your own premiums or deductibles (the amount you pay out of pocket before insurance kicks in). The AMA estimates the total malpractice liability system costs the U.S. about $55.6 billion annually, a significant portion of which flows to patients. A licensed insurance agent can help you evaluate your current policy coverage and whether your plan reflects competitive pricing for your area.
Does living in a high-litigation state like Florida or New York mean I'll pay more for health and medical insurance in 2026?
Indirectly, yes. States like Pennsylvania, Kentucky, Florida, Illinois, and New York have seen repeated large malpractice premium increases in both 2024 and 2025. In these hard-market environments — where coverage is expensive and harder to obtain — physicians face higher operating costs, some specialists leave the market, and healthcare prices can rise. Running a thorough insurance comparison between plans available in your state, particularly around specialist network stability, is a smart protective step. A licensed professional can assess the risk assessment implications for your specific coverage needs.
What is defensive medicine and how does it drive up my out-of-pocket healthcare costs?
Defensive medicine refers to when doctors order additional tests, imaging, or specialist referrals primarily to protect themselves from potential lawsuits rather than because you clinically need them. It functions as liability insurance for the physician, paid for by the broader healthcare system. A February 2026 Georgia State University study found that tort reform saves hospitals about $372 per patient in defensive medicine costs — roughly $2.38 million per hospital per year. When those savings flow back into the system, they have the potential to reduce your out-of-pocket expenses and improve overall claims management efficiency.
Are there AI-powered insurtech tools that can improve medical malpractice claims management and help lower premiums?
Yes, and this is a rapidly developing area. Insurtech platforms are applying machine learning to medical liability risk assessment — analyzing physician-level procedure data, patient outcomes, and litigation patterns to price policies more precisely. On the claims management side, AI systems can detect inflated or fraudulent claims earlier, cutting legal costs and resolution times. More accurate underwriting could produce fairer premiums for low-risk physicians and create downstream insurance savings for patients. If you're a practice owner, ask your broker whether their carriers use AI-assisted risk assessment tools in their underwriting process — it's an increasingly important differentiator.
Should small business owners who employ healthcare workers review their liability policy coverage given the AMA's 2026 findings?
Absolutely — and if you haven't reviewed your coverage in the past 12 months, now is the time. The AMA's research confirms the U.S. is in its longest sustained hard market for medical liability since the early 2000s, driven by social inflation (the tendency of juries to award increasingly large verdicts) and the erosion of damage caps in several states. For small businesses employing nurses, therapists, or other licensed healthcare workers, your professional liability and general liability policy coverage may need updating. Conduct a fresh insurance comparison across multiple carriers with the guidance of a licensed agent, paying close attention to your state's litigation environment since risk assessment varies significantly by geography.
Disclaimer: This article is for informational purposes only and does not constitute insurance advice. Always consult a licensed insurance agent for personalized guidance.
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