The Underestimated Complexity of Medical Malpractice in Canada

Medical malpractice in Canada is often seen as relatively stable. Claims move slowly through the courts, and with a cap on damages in place, payouts are typically more predictable than the headline-grabbing verdicts often seen in the United States.

However, that stability can be misleading.

“Medical malpractice risk in Canada is often misunderstood as being low frequency and low severity, and primarily physician-centric,” says Michael Brennan, Underwriting Director, Specialty – Healthcare & Life Science at CNA Canada. “In reality, the risk for healthcare organizations is quite different.”

How Liability Emerges

One issue is that risk protection often focuses on physicians, rather than the organizations they work for. While individual physicians are supported through the Canadian Medical Protective Association, a legal defence organization that works on behalf of doctors, healthcare entities themselves can face direct allegations of corporate negligence. “That means they can potentially be found liable for anyone who works for them,” Michael says.

Claims can extend beyond clinical judgment, he adds. They can be tied to policies, staffing, hiring practices, due diligence and governance. “When claims do arise, they are often very complex, slow moving and defence intensive, particularly for organizations,” Michael says.

The Short and Long Tail

Malpractice exposures also vary widely by provider type. For example, in acute care, claims tend to emerge quickly, reflecting the urgency of care—an incorrect decision in the case of a heart attack or stroke can heighten risk. In primary care, issues may surface later, for example, a misread scan that leads to a missed cancer diagnosis. In long-term care, such as seniors’ homes, allegations often point to systemic failures rather than single events.

“In acute care, it’s a short tail because we’ll know right away if something goes wrong,” Michael explains. But in other cases, such as a permanent spinal implant, an issue might not arise for years. “If 10 years down the road, it’s found to be a defective product and patients have to have it surgically removed, it has a long tail of exposure,” Michael says. “You’re not going to see claims today, but down the road you might have a massive class-action lawsuit.”

Where Insurance Coverage Falls Short

Beyond different tail risk and claim triggers, insurance coverage is often structured around a one-size-fits-all view of risk, based on claims frequency, severity and annual limits. It must also account for how claims emerge and progress across different healthcare settings.

Michael illustrates this with the example of a large pharmacy chain named in a lawsuit alongside an individual pharmacist, who has separate coverage.

“The mistake that is often made is companies are told they don’t need entity coverage because their healthcare providers are covered individually,” Michael says. “But if the entity gets named, they’re very much exposed to paying out a medical malpractice claim if they don’t have entity coverage. We’re there to protect the entity.”

Insurance that Reflects Canadian Medical Liability Realities

When building solutions, the right insurance partner will understand how claims unfold over time. “A well-designed program should account for long-tail claim development, cumulative defence costs and entity-specific exposures, along with professional credentials, operational complexity and growth,” says Michael.

Organizations should also look at the interplay between medical malpractice coverage and other policies such as directors and officers, errors and omissions, and cyber insurance. For example, if a telemedicine platform has a software glitch that results in patient harm, is that a product or cyber claim or a medical malpractice claim? “Alignment between the client’s operations and policy definitions is key,” says Michael.

Emerging exposures are also driven by healthcare technologies and new care models that often scale from zero revenue to millions in the first year alone. “If you hire 1,000 people in the next month, you have to be prepared to do it properly,” Michael says. “Make sure they have proper training and that they’re following the systems and protocols you have in place.”

Brokers play a key role in this, starting with educating clients about risk. “Many entities often underestimate their exposure simply because they haven’t actually experienced a claim yet,” Michael says. Proper coverage ensures an organization is protected even if the risk isn’t immediately visible and a claim arises years later.

Ultimately, the value isn’t just in capacity, but in program design that reflects Canadian medical liability realities, which are far more complex than they appear.