This article is part of our Hot Insurance Markets for 2012 special feature.
Healthcare is one of the country’s largest industries. Annual spending on healthcare in the U.S. tops $2.6 trillion, more than 16 percent of the U.S. economy. While healthcare spending has leveled off the past few years, the industry remains a significant segment of the economy.
As one of the largest industries, healthcare provides 14.3 million jobs. Ten of the 20 fastest growing occupations are healthcare related.
The nation’s nearly 600,000 healthcare establishments range from small-town private practices of physicians with one assistant to large hospitals that provide thousands of jobs. About 76 percent are offices of physicians, dentists, or other health practitioners, according to the Bureau of Labor Statistics.
In addition, the healthcare industry includes nursing and long term care facilities, home healthcare services, ambulatory services and a variety of other practitioners.
Healthcare is a fast-changing environment in which technology, cost concerns and regulation are creating new challenges, opportunities and risks every day.
Technology is making possible new methods of diagnosis and treatments. In addition, information technology is improving patient care and worker efficiency and replacing paper records with electronic, while posing cyber risks.
Cost pressures and regulation are forcing the industry to emphasize more outpatient and ambulatory care, preventive care and the use of integrated delivery systems. Also, federal healthcare reforms promise to affect the number of people who will be treated by providers, and the number and type of medical procedures that will be performed.
An industry this large and important obviously has great need for P/C insurance.
Medical Professional Liability: It comprises only about 2 percent of annual direct premiums for the U.S. property/casualty insurance industry, but the medical professional liability (MPL) insurance business is integral to the U.S. healthcare system.
The MPL business has performed strongly in recent years, according Moody’s Investors Service, thanks in part to tort reforms and favorable judicial decisions.
Changes in the delivery of healthcare in the U.S. are affecting MPL. There is a shift toward multi-specialty and multi-state physician networks and hospitals, as well as integrated regional and national healthcare organizations.
Moody’s expects a corresponding shift toward MPL insurers with multi-specialty and multi-state underwriting and claim-servicing capabilities.
Other Healthcare Interests
While medical professional liability may be an active area, every week another insurer or broker introduces a program, tweaks a coverage, forms a healthcare specialty unit, or expands into a new segment of the healthcare market. Here are some recent developments:
Wellness Centers: The demand for cosmetics has proved to be somewhat recession proof. Susan Preston, president of Professional Program Insurance Brokerage (PPIB), said that 2011 saw a huge boom in wellness clinics. PPIB offers a program backed by Lloyd’s of London. Preston said wellness centers are looking for coverage for everything from laser-assisted lipolysis and tumescent liposuction to hormone replacement therapy and hair restoration.
Sleep Centers: Philadelphia Insurance Cos. has begun offering coverage for sleep centers and laboratories that diagnose and treat sleep disorders, a growing industry designed to help combat serious health problems. With an estimated 50 to 70 million U.S. adults facing sleep disorders, this could be a big growth area for the company.
Philadelphia’s coverage includes general and professional liability, as well as property insurance for independently owned and operated centers.
Loss Transfer: IronHealth has developed a Loss Portfolio Transfer Plus Program for captive insurance entities and other alternative self-insurance vehicles in the medical professional liability sector. LPT Plus is designed to help alternative risk financing vehicles in two ways. It helps them monetize any excess reserves and distribute them to insureds as dividends. In addition, it helps them structure the transfer of old liabilities off the captive’s balance sheet, thereby freeing up excess reserves and allowing the captive to offer more attractive pricing to its members.
Skilled Nursing: The long term care and nursing segment has been experiencing growth thanks to the baby boomer generation, and this market is expected to grow exponentially in the future, according to Sandy Elsass, CEO of Uni-Ter in Atlanta, who specializes in this market. “Every eight seconds someone turns 60; the 85-plus population is growing faster than any other generation today,” said Elsass.
Increased scrutiny by Medicare is putting more pressure on nursing homes or long term care facilities to make sure they are coding and billing Medicare and Medicaid claims accurately. Willis launched a reimbursement coverage for providers that are dealing with Medicare and Medicaid services. The policy covers claims or penalties arising out of miscoding or improper billing.
Healthcare Cyberisk: Huge data security breaches appear to be happening in the healthcare industry on a regular basis and insurers are even willing to throw in cyber coverage at no cost in order to get insureds to take the exposure seriously. Over the past year several carriers including Medical Protective and ISMIE started writing cyber liability for doctors at no extra cost. Markel has also begun offering data breach coverage to health-related risks as an endorsement. It’s free, but only offers low limits.
More Hot Markets for 2012
Topics Cyber USA Excess Surplus Medical Professional Liability
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