Medispas - More Accounts Expected
Critterden's Medical Insurance Newsletter
October 19th, 2015
Carriers will ask more questions during the underwriting process for medispas and require a review of certificates of training – with specific hours completed – as they move to curtail losses in the segment. Laser hair removal remains the top procedure generating claims, especially with a corresponding rise in demand for this service. Lloyd’s of London-backed PPIB’s medispa premium is growing 5 percent to 10 percent annually because many clients have incurred claims, leading PPIB to add a surcharge to those risks. However, competitive conditions will keep most rate increases at bay, especially for accounts with no claims history.
Expect the number of prospective accounts to grow in relation to increased demand for all services. Tattoo removal has become more popular in recent years and many medispas opened within the last year focused only on tattoo removal. Improved technology is also leading medispas to offer less invasive procedures that require a shorter period of down time for patients. Also, more nurse practitioners and physicians are moving into this industry to provide additional services, either within their own facilities or as a side business to increase income. Online video consultations are becoming more commonplace, creating the possibility of a new cyber liability exposure. PPIB added cyber liability during the last six months.
Insurers and producers willing to ensure that coverage includes the actual replacement cost of expensive equipment – based on true cost rather than the original value of the equipment – used at a medispa may gain a competitive edge in this segment. Some medispas face gaps in coverage when it comes to equipment replacement costs as this equipment depreciates in value very quickly. New equipment can cost thousands of dollars or more, making it difficult to purchase new equipment if a replacement coverage is tied to the price of the older equipment.
Medispa writers, such as General Star, Beazley, Lloyd’s of London writers NAS Insurance and PPIB, and Hiscox USA, will likely seek more information about training and staff certification for various procedures during underwriting. About a year ago, carriers began requiring minimum lengths of training, especially for new ventures, and copies of training certificates that show the number of hours of training and which procedures the training covered. When it comes to laser treatments, specific training requirements help reduce the risk of patients being burned, particularly if healthcare providers are better educated in handling different skin types, especially those that may be more susceptible to burns.
Lloyd’s-backed PPIB’s medispa program offers professional and general liability, sexual abuse, cyber and property coverages. Limits are available up to $2 million/$3 million. Minimum premiums depend on the class. Like PPIB, Hiscox will examine procedures and typically extend coverage when performed by licensed, trained and experienced professionals.
Since these requirements are sometimes difficult to meet with new procedures, the carrier relies on past experience and the proficiency and responsibility demonstrated by the practitioner to underwrite a new treatment or technique. Hiscox can cover any procedure, ranging from basic aesthetic to surgical. It offers professional liability, claims-made or occurrence general liability, hired and non-owned auto, abuse, HIPAA liability, privacy, crime and physicians as insureds for direct/indirect care. Limits are available up to $10 million, but Hiscox typically writes $1 million/$3 million for this class.
General Star offers coverage for aesthetic/cosmetic, alternative/complementary medicine, nutritional counseling, preventative medicine, stress management and weight management. It won’t cover medispas without a physical medical director as well as facilities offering non FDA approved treatments.