Crittenden expects carriers to increase premium volume for medical clinics as Americans newly insured under the Affordable Care Act create additional demand for care in outpatient settings. To meet this new demand, medical clinics at all levels of care – ranging from low levels of care at walk-in retail clinics to surgery centers – will continue to expand. Medical clinics are also supplementing care needs amid a shortage of primary care physicians, with many nurse practitioners and physician assistants stepping up to provide care. Clinics are also helping to close a gap in care in rural areas as well.

Submissions will increase from retail health clinics, walk-in clinics and urgent care this year, especially as more retailers, such as CVS, expand offerings and open more clinics. Revenue at outpatient care centers is on the rise and during the first quarter of this year was 8.7 percent higher compared to the first quarter of last year, reaching $28.4 million. Retail health clinics, similar to urgent care centers, provide convenient primary care, but are often staffed by midlevel providers.

Claims at these clinics tend to arise around misdiagnosis, failure to diagnose and patients not liking how a diagnosis was explained to them. A lack of doctor-patient relationship can also create additional claims situations since the healthcare provider relies solely on information provided by the patient. Comparatively, a physician practice would already know about comorbidities and prior medical history, and take that information into consideration. Mobile clinics have also emerged in the last two years as home health agencies add physicians to care for homebound residents and others who would prefer to have the physician visit, in a twist on concierge medicine.

Competition and low minimum premiums, often as low as $2,500 for full coverage, will make it difficult for carriers to post significant premium expansion in this segment, especially with additional capacity from many Lloyd’s of London-backed programs. XL Catlin, James River, Kinsale, Admiral, Allied World, Hiscox USA, Ironshore and General Star are among the non-admitted carriers that may pick up additional medical clinic accounts and premium, but their gains will likely be tempered by low rates. These non-admitted carriers tend to price risks based on exposures and often walk away from underpriced accounts. Most carriers will focus in on adding services and perks to promote retention as well as provide additional tools to insureds to improve patient outcomes. Ironshore began offering a toll free risk management hotline in June to respond to any risk management questions related to outpatient care.

New Discrimination in Underwriting

Crittenden expects selectivity to be a key component of carriers’ strategies to maintain profitability in this increasingly competitive segment. When underwriting a medical clinic, Lloyd’s-backed Allied Protector Plan considers size, annual revenue, and number/type of licensed medical personnel. This has aided the Allied Protector Plan to report a low loss ratio during the program’s five years on the market. General Star can cover to a wide range of clinics, including walk-in, urgent care and community health clinics, but won’t back outpatient medical clinics without a medical director or inpatient/residential facilities. General Star can offer limits up to $5 million. It works with wholesale brokers.

James River prefers true medical clinics but will consider at all types including wellness centers, aesthetics and mobile medical. The carrier won’t cover risks with overnight patient care (other than sleep labs), facilities with gyms or fitness centers on premises, and any centers in West Virginia. James River offers professional liability/general liability with and without physicians/providers, and broad terms. Its minimum premium is $3,500 without a physician and $5,000 with a physician. Primary limits are available up to $1 million/$3 million with excess available up to $5 million. James River works with authorized brokers.

Kinsale offers coverage to outpatient clinics, surgery centers, emergency care/urgent care, outpatient rehab, health/wellness clinics, but won’t write risks in West Virginia. It can offer primary or excess limits up to $5 million and follow-form excess limits up to $5 million on an unsupported or supported basis and can include auto and employer’s liability. Kinsale works with surplus lines brokers.

Carriers and program administrators are reporting additional accounts and opportunities despite heavily competitive conditions. The Lloyd’s/Allied Protector Plan has had significant success outside of mainland U.S. in areas such as Hawaii and Puerto Rico. Clinics are already a top-selling class for a one-year-old Lloyd’s-backed program at Greenhill Insurance Services. Arch expects an expansion of services specifically at urgent care clinics to create additional opportunities. Arch can offer primary limits up to $1 million/$3 million and umbrella limits up to $10 million. It works with Arch Healthcare appointed brokers. XL Catlin anticipates picking up new urgent care accounts via small startups and young organizations. XL Catlin offers professional liability/general liability limits up to $5 million/$10 million. It works with wholesale brokers.

The Lloyd’s/Allied Protector Plan program can offer professional liability/general liability, a sexual abuse and molestation sublimit, and excess. Outside of its in-house program, Allied Protector Plan can also offer, in some cases, property coverage, hired non-owned auto, EPLI and full cyber/privacy liability. Its base limit is typically $1 million/$3 million or $2 million/$4 million, but excess coverage up to $10 million can be secured from Lloyd’s partners. The program administrator doesn’t set a hard minimum premium but premiums typically start at about $2,000 for clinical risks.

Other classes can be as low as $500. The Lloyd’s/Allied Protector Plan program can write a variety of medical clinics from urgent care and hospitals to outpatient ambulatory surgery centers. Allied Protector Plan works primarily with wholesale brokers and large retail agencies. It doesn’t have any hard requirements and will quote to a new broker and later determine if the relationship makes sense.

Copyright © Crittenden Research Inc., September 14th, 2015