Health care organizations are facing a much more challenging directors and officers (D&O) liability insurance market as they adapt to changes arising from the Affordable Care Act (ACA), according to a new report from Marsh.

It reveals that average primary D&O rates for midsize and large health systems increased by 9.6 percent in the third quarter of 2013, while total program D&O rates renewed with 7.9 percent increases on average.

Nearly all organizations – 91 percent – renewed with rate increases, according to its findings.

Marsh notes that since the passage of the ACA in 2010, the health care industry has undergone rapid consolidation resulting in organizations working more closely together and sharing information.

As a result, many health care organizations face increased exposure to antitrust risks and this has insurers concerned.

In some cases D&O insurers have lowered their antitrust sublimits and increased antitrust-related coinsurance requirements and retentions, Marsh says. In addition to raising rates, some D&O insurers are also pulling back on offering full policy limit defense coverage.

It quotes Mark Karlson, Marsh’s FINPRO Health Care Practice Leader:

Ongoing merger and acquisition activity and the transition to accountable care organizations and similar networks are creating new exposures for many health care organizations, including antitrust risks.

This has resulted in a much more challenging D&O market for health care companies. Risk managers should expect to face additional rate increases in 2014 and be prepared to provide underwriters with detailed answers about their response to health care reform.”

PC360 has more on this story.

Check out I.I.I. information on D&O liability insurance.