Looking Good Looks Good for Insurance Business
Who says looks aren't important?
Insurers have found over the last few years that Americans think looks are extremely important. While many industries have been lagging, the demand for cosmetics has proved to be somewhat recession proof.
Medi spas have increased in both number and scope, and insurance coverages have been forged to meet these new needs. This next year should provide ample opportunity for insurers to create new products and endorsements for everything from hormone treatment to new weight loss procedures.
Susan Preston, president of Professional Program Insurance Brokerage (PPIB), said that 2011 in particular saw a huge boom in growth for demand in the wellness clinics, an offshoot of medi spas.
"We've had to adjust our program almost continually in the past year," Preston said.
PPIB offers a medi spa program backed by Lloyd's of London. Preston said the company saw so many changes that they hired someone to help research new risks this past summer. The company anticipated this position would just be for the summer, but they ended up extending it due to the high demand.
They have had to study everything from human chorionic gonadotropin to phentermine to testosterone and many other types of individual hormones.
"We live in a world where no one wants to get overweight, and nobody wants to age, and nobody wants to stress themselves out too much to get these things," Preston said. "I think this trend will continue. I think we're going to continue to find new things over the next year."
Apparently the easiest way to stop aging, or at least let people think they have stopped aging, is through medicine. Preston said that in the past year wellness centers started looking for coverage for everything from laser-assisted lipolysis to tumescent liposuction to hormone replacement therapy to hair restoration. All of these risks require unique underwriting and specific knowledge.
Most of these are fairly new procedures, so PPIB is examining them closely. For instance, they have received interest from hair loss and hair transplant specialists – and even have a few on their books – but it is not sure how much of this business they want to write or will ultimately end up covering.
"It's a tricky market right now," Preston said. "If they aren't careful, companies are really going to end up stabbing themselves in the foot because there are so many new things."
PPIB is not the only company who has seen an increase in demand for some of these new procedures. The Allied Health Association has established levels for its medi spa product. The organization has a standard medi spa policy that starts at $2,500 per location. However, the company offers additional coverages based on what the medi spa is doing.
The expanded level 1 includes hormone replacement, vitamin B injections and levulan photodynamic therapy for an extra cost of $500. Level 2 is for facilities offering acupuncture and ear candling and costs $1,000 extra. Level 3 adds a cost of $2,500 and includes coverage for tumescent liposuction and other lipo procedures. The highest level costs $5,000 more than the traditional policy and covers everything from chemical peels to hair restoration/transplantation, hyperbaric treatment and liposhaping.
As much as demand has been generated from people worried about getting older, it has been quickly met by doctors looking to expand beyond traditional medicine.
"I think that there are a lot of doctors who want to get out of traditional medicine, so they are experimenting with a lot of things," Preston said. "But just because a doctor wants to do something doesn't mean it should be insured."
To help keep them from entering dangerous territory, PPIB uses a nurse at a highly aggressive treatment facility that is familiar with what procedures are safe as a consultant.
Preston said Lloyd's has been quite good about offering to provide the necessary coverage because it trusts PPIB to carefully review the risks involved.
PPIB's medispa program used to be written directly, but the company has pretty much switched over to a broker-based product. PPIB is looking for new brokers, especially those with specific knowledge of the medispa industry.
The company's product can cover a variety of insurance aspects, including general liability and property. However, the insured must be willing to purchase professional liability for PPIB to consider them. Medical malpractice is not covered per se, but the company will cover doctors on an a la carte basis. Basically, PPIB fills the gaps that a general med mal insurer might not be willing to cover.
As the economy slowly recovers, the outlook for growth among wellness clinics and the insurers that cover them only looks better.
"People just don't want to do anything at all to age," Preston said. "They really will take care of themselves before they do anything else. I think that trend will only continue as people have a little more money in their pockets."