Commercial Insurance Loss Trends in the Dental Industry

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As one of the largest insurance brokers in the dental industry, we’ve had the unique opportunity to observe the loss trends impacting DSOs and large dental groups over the past several years. These trends highlight the growing need for proactive strategies to mitigate risks and protect operations. From cyber threats to malpractice claims and natural disasters, the challenges dental practices face continue to evolve. Drawing on our experience working closely with DSOs and large groups, we want to share key insights into the losses being observed in cyber liability, malpractice insurance, and office insurance. These observations provide actionable tips to help safeguard your practice against emerging risks and uncertainties.

Cyber Liability Insurance: Escalating Frequency and Severity of Attacks

The dental industry has become an increasing target for cybercriminals, with attacks growing in both frequency and severity. These cyber risks are no longer limited to small-scale incidents—they now carry significant financial and reputational consequences.

Ransomware Demands: Ransom demands are now averaging six figures, posing a serious financial threat to dental practices. Cybercriminals have developed more sophisticated methods of gaining access to systems, making practices more vulnerable.
Class Action Lawsuits: Patient groups are increasingly filing class action lawsuits following data breaches. If a practice’s cyber policy has insufficient liability coverage, defending against these lawsuits can be financially crippling.
Spoofing and Fake Invoices: Another alarming trend is the surge in well-executed spoofing attacks, including fraudulent invoices:
- To patients: Fraudsters send invoices posing as the dental office, tricking patients into paying fraudulent bills.
- To centralized accounting teams: Fake vendor invoices are being routed to accounting departments, where they often appear legitimate.

💡Tip for Prevention: Implement a secondary authentication for payments exceeding $5,000, requiring verification through phone, text, or email.

Malpractice Insurance: Severity of Claims is Increasing

While the frequency of malpractice claims has remained relatively steady, the severity of claims—or the cost of payouts—is rising significantly. Several factors are contributing to this trend:

Social Inflation: Juries are increasingly awarding higher settlements to plaintiffs, driven by societal attitudes and the perception that dental practices can “afford” large payouts.
Rising Malpractice Caps: State-level reforms are increasing caps on non-economic damages and wrongful death claims. For example, in Colorado, caps for malpractice cases will significantly rose in 2024 and will be adjusted for inflation every two years starting in 2030.
Third-Party Litigation Funding: External companies financing lawsuits encourage plaintiffs to pursue higher awards, fueling more litigation.
Speculation Around AI in Dentistry: As AI integration grows, adverse outcomes linked to AI-driven diagnostics or treatment plans could lead to new litigation challenges.

💡Tip for DSOs: Regularly review your malpractice insurance policy limits to ensure they account for rising claim severity. Partner with a knowledgeable insurance advisor to navigate these changes and secure the protection your practice needs. A risk management tip for AI is to document, document, document!

Office Insurance: Natural Disasters and Water Damage on the Rise

Office insurance, often referred to as office package insurance, has seen a rise in claims driven by natural disasters and water damage incidents.

Natural Disasters: Depending on location, practices are increasingly impacted by hurricanes, floods, wildfires, and severe storms. This trend underscores the need for location-specific risk assessments and appropriate coverage.
Water Damage Claims: Beyond natural disasters, water damage from broken pipes or equipment failure can lead to costly repairs, operational downtime, and revenue loss.

💡Tips for Prevention:

Equip operatories with water detection devices to identify leaks early and minimize damage. These devices are affordable and available at most hardware stores.
Include the main water shut-off valve in the staff’s end-of-day closing checklist.
Annually review replacement cost limits to ensure they align with current costs for equipment and building materials, which have risen due to inflation.

Your Broker: An Extension of Your Business

When you work with an experienced broker and trusted insurance carrier, you’re not just purchasing a policy—you’re building a partnership that mitigates risk, reduces costs, and ensures long-term sustainability. A knowledgeable broker acts as your organization’s insurance division, streamlining processes, offering expert risk management insights, and keeping your business protected as it grows.

An excellent broker will check in with your group at least twice a year to stay updated on any changes that might affect your risk profile. This ensures that your coverage remains aligned with your evolving needs. Transparency in coverage and pricing is crucial to making informed decisions.

Key Takeaways for Dental Practices:

Cyber Liability: Increase policy limits to account for ransomware demands, spoofing attacks, and class action lawsuits. Implement multi-factor authentication for large payments.
Malpractice Insurance: Monitor state-level changes to malpractice caps and ensure coverage accounts for rising claim severity due to social inflation and litigation funding.
Office Insurance: Address water damage proactively with water detection devices and closing protocols. Assess regional natural disaster risks and ensure adequate replacement cost coverage.

By staying informed of these trends and taking proactive steps, dental practices can protect their operations, patients, and financial health in an increasingly complex risk environment. Partnering with an experienced insurance advisor can ensure you have the right coverage to meet today’s challenges and future-proof your practice.

Visit www.joindis.com/group-malpractice or contact Carrie at carrie@joindis.com to get a risk assessment today.

Dentist Insurance Services strives to be the source for information on insurance for all dentists. From dental school to retirement, we insure you and your practice every step: http://www.joindis.com. Established in 1989, we are the dental risk experts and take pride in managing the insurance portfolios of each and every client. Created for dentists by dentists, we provide exceptional customer service, competitive rates and partner with the best carriers in the country to deliver an outstanding portfolio of insurance products. Available in all States.