Insurance consultant, Larry Hansard of Gallagher, provides timely advice for companies navigating the telehealth insurance marketplace.
The telemedicine insurance market is constantly changing and can be confusing. Many telehealth startups are new to procuring insurance on behalf of a corporate entity, and the marketplace may be tricky to navigate. Here we’ll help dissect some of the current changes to help you strategically approach an underwriter.
1. Procurement of commercial insurance is not the same as a commodity purchase.
Those who are new to the changing telemedicine marketplace may expect to see insurance companies fighting for their business, and that someone out there will always want to bid. This isn’t the case for commercial insurance, especially in the current ‘hard market’ (seller’s market) where there are only a few insurance carriers writing coverage in the telemedicine space. This lack of competition allows underwriters to price differently than when there is a lot of competition.
With limited market interest, obtaining competing quotes may not be easy. It’s important that you work with an agent or broker who specializes in this industry and can help you find the right approach for your commercial insurance needs.
2. Insurance underwriters must be approached strategically – like potential investors.
Commercial insurance companies are being asked to put up millions of dollars on behalf of their insureds. Underwriters are now in a position to be extremely selective on what accounts they write, and many have limited capacity for new business. We’re also seeing that insurance carriers may only consider 1 out of every 10 submissions that they receive.
To achieve the best possible terms and conditions in your policy, you must market yourself in the best possible light. Accordingly, it’s important to consult with experts on the best way to approach carriers with respect—not as a commodity—and provide very detailed and accurate submissions.
3. Be prepared for rising telehealth insurance premiums.
COVID-19 has dramatically amplified the growth and adoption of telemedicine, which is a positive for new and growing telehealth companies. But with this growth may come premium increases for Medical Professional Liability.
Other factors that may impact telemedicine insurance pricing that you should prepare for include:
- Insured’s revenue
- Number of patients
- Number of clinicians
- Venues and tort environment where services are offered
- Clinical specialty
- Prior claims (note: we see very few claims from telemedicine)
To understand the change in premiums, it’s important to know the difference between rate increases and exposure increases before you approach an underwriter.
- Rate increases are increased policy costs that an insurance carrier demands due to adverse underwriting conditions—like market influences and poor loss experience. Fortunately, we are seeing minimal rate increases for telehealth companies at present. It’s safe to budget 3-5% for rate increases, assuming COVID-19 losses don’t significantly change.
- Exposure increases refer to an evaluation of your company’s risk in order to calculate insurance premiums. Unfortunately, with the growth of telehealth services comes increased exposure costs. If your company’s revenues and patient visits have tripled or quadrupled in the last 12 months, then you should expect premiums to increase proportionately.
4. Providing accurate projections in good faith helps build trust with your insurance partners.
It’s tempting to want to revise projections to lower insurance costs when faced with a large premium increase due to exposure. However, it’s likely that this will lead to a negative outcome. Underwriters allow insureds to provide data and assume the insured is doing their best to accurately predict their circumstances. With multiple changes and revisions to lower the premium, you risk losing credibility with the insurance provider.
It’s important to put careful thought into projections and leverage a healthcare insurance consultant for guidance when needed. Consultants like Gallagher can strategically advise on patient encounter and revenue projections, as well as important policy features like audits to protect all parties during uncertain times.
5. Cyber and Privacy Liability must be adequately insured.
We continue to see clients that are underinsured for Cyber and Privacy Liability. Many organizations purchase less than $5 million in limits, despite the fact that they may hold hundreds of thousands of patient records. A recent report from the Poneman Institute projects that the cost per patient record for a healthcare company privacy breach averages $429 per patient record, making this a significant exposure.
Working with a team that has a breadth of expertise in telemedicine, healthcare, and cyber means that you have access to resources and solutions to address current cyber risks and ensure that you’re properly covered.
- Larry Hansard, Area Director, Healthcare Practice at Gallagher
For help navigating the complex telehealth insurance market contact Larry Hansard at Gallagher.
Mitigate increases with help from Wheel & Gallagher
Given the current marketplace, it’s important to stay apprised of critical insurance changes. Wheel and the team at Gallagher can help you develop strategies to mitigate these increases and protect your company in these uncertain times.
Remember, when you tap into Wheel’s clinical network, Wheel provides medical malpractice coverage for those clinicians, as well as Cyber Liability coverage related to our technology platform. That provides a big upside when you’re evaluating all of your insurance coverage needs.
To learn more about how Wheel can help you launch or expand your virtual care services nationwide, contact our sales team today and get moving within a few short weeks.
Gallagher provides insurance, risk management and consultation services for our clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance/risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general informational purposes only and the material is not intended to be, nor should it be interpreted as, legal or client specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient’s industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers control.