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What are the biggest emerging risks in behavioral healthcare today? Matthew Jung, Managing Director, Healthcare, recently joined industry experts on an Insurance Insider panel to explore the trends transforming the behavioral health risk landscape.
Published on August 14, 2026
5-minute read
Behavioral health is seen as one of the fastest growing exposures in the medical professional liability insurance market. Approximately 23.1% of the US adult population lives with a mental illness, while one in seven adolescents globally experience a mental disorder. As demand for services and new technologies increase, underwriters must become familiar with new and emerging risks to provide equitable coverage and pricing.
1. Rising demand and complexity in behavioral health
In the wake of COVID-19, reported levels of anxiety and depression have increased dramatically—and demand for mental health remedies has increased in kind. A broader awareness of mental health has also led to more patients with comorbid conditions, at least four out of ten according to the Centers for Disease Control and Prevention. This requires higher levels of care than the patient may have initially sought and can lead to provider mismatches and increased risk overall.
Funding and access to specialized treatments has reduced as a result of recent legislation, leading high acuity patients to be treated at lower levels of care. Providers who operate on a full continuum of care can help facilitate the appropriate transitions in treatment and reduce gaps in coverage—two of the major risks in healthcare delivery.
As mental health needs become more complex, access to the right level of care is critical to improving outcomes and reducing risk.
2. Medical malpractice and behavioral health
Increased specialization has led to more complex risks surfacing around medical malpractice. At Markel, we treat behavioral health as a separate segment within our insurance portfolio due to its rapid growth and unique risk profile. We understand that risks aren’t the same across settings, with inpatient treatment and counseling having higher risk than outpatient and telehealth. Still, these lower risk treatments are growing increasingly complex due to high acuity patients seeking ongoing care for their chronic conditions.
Carriers who enter the space without fully appreciating the risks can destabilize coverage for these patients and negatively impact both brokers and care providers. For underwriters to properly tailor products to emerging risks, collaboration with frontline providers and continued education are essential and should be included in their workflow. Otherwise, gaps in coverage can lead to escalating consequences for both the business and the insureds.
3. AI, technology and new delivery models in behavioral health
Artificial intelligence, from notetaking to predictive analysis, has helped enable proactive clinical interventions and potentially improved patient outcomes. Still, these systems are imperfect and can unearth unique exposures outside of traditional risk profiles.
Overreliance on AI for diagnosis and treatment is a notable exposure that must be managed on a provider level. Clinical judgement and subjectivity remain essential, as AI is meant to support clinicians and not replace them. Organizations following best practices use AI for prescreening calls and lead scoring while employing master’s-level clinicians for triage.
Other tech innovations, such as teletherapy and wearable health tech, can potentially improve access for underserved communities and proactively track patient progress but also carry legal and ethical concerns. Issues ranging from licensure and jurisdiction to crisis management and system glitches all increase risk in telehealth, while clinicians also face dilemmas in patient compliance and potential abandonment when using remote monitoring technology. Data sovereignty and patient safety are two foundational considerations for underwriters to weigh amid these changes.
As AI and digital health technologies reshape care delivery, clinical judgment, patient safety and effective risk management remain essential.
4. Private equity influence in behavioral health
According to the Private Equity Stakeholder Project, private equity (PE) firms owned approximately 9.5% of all private hospitals, with nearly a third of those being psychiatric hospitals. The involvement of PE firms can bring funding to these practices, but also inherently shift their missions towards profitability. At a time with increased demand for behavioral health solutions, reported layoffs and closures can increase staffing problems and reduce access to care.
The reduction of senior clinician staff to increase margins compromises clinical quality and institutional knowledge—all increasing risk. In more profitable scenarios, the rapid growth can lead to gaps in quality and increased liability for insurers if provider credentialing doesn’t keep up. Due diligence into clinic ownership is essential for ensuring coverage meets the provider’s needs.
5. Emerging exposures in alternative mental health treatment models
Alternative mental health treatments, including the use of transcranial magnetic stimulation (TMS), ketamine, psilocybin and MDMA, are increasingly used for targeted treatment. Each methodology has varied evidence bases; for example, TMS and ketamine therapy show promise addressing treatment-resistant depression. Wraparound support is vital—though it is often unavailable to many patients.
As with other emerging treatments, clinical oversight and proper clinical risk management are necessary. Insurers must scrutinize these evidence bases, as well as any broad claims of usefulness or success, to properly underwrite risks on alternative treatments. A treatment’s efficacy needs targeted, credible interventions to be considered successful in the eyes of an insurer. Asking organizations that offer alternative treatments for their integration models and risk management strategies can help paint a fuller picture of potential exposures.
The success of alternative mental health treatments depends not only on the treatment itself, but on the support, oversight and risk management surrounding it.
Moving forward in an evolving field
Approaching complex risks in healthcare, particularly with mental and behavioral health, requires attentiveness and an understanding of the field from frontline providers. Clinical oversight remains an important step in mitigating risk, but it doesn’t cover everything. With the introduction of AI tools and agents, best practice assessments must include cyber risk considerations and a differentiation of safe practices. To support this, organizations must maintain a clear chain-of-command that derives care decisions from professionals, not solely AI or PE firms. Successfully underwriting these emerging risks, especially for high acuity patients, relies on partnership with experts and continuing education.
Watch the Insurance Insider panel: Emerging risks in healthcare and the mental health crisis
