Robert N. Kretzmer, CPIA, CIC, of Inner Harbour Insurance, Inc., approaches Medi spas from the beauty and day spa side of the industry. He states that many of these spas are written using a standard Businessowners policy with limited or no professional liability coverage at all. Since these are usually small operations, the agent may not have an accurate list of all the services offered by a particular spa.

The esthetician is often a pivotal player. While able to operate unsupervised on the beauty side, a supervising physician must be present when medical procedures are performed. An esthetician must be specifically licensed as such in some states but can operate under a cosmetologist license in others. According to Mr. Kretzmer, from the insurance standpoint, the problem for the Medi spa occurs when both the esthetician and the supervising physician have a professional liability policy. Which one protects the Medi spa? The professional liability policy covers the individual professional, but probably does not cover the Medi spa named in the same suit.

Fran O’Connell, Vice President - Product Manager at Shand Morahan & Company approaches Medi spas from the medical malpractice standpoint. Medical professional liability covers the specific business entity and every employee that provides covered procedures. It also covers the medical director for his or her administrative acts. Note that the medical director is not required to be on-site at all times. The professional that provides services must be either a licensed healthcare professional operating within the parameters of the particular license and trained for the specific procedure, or be trained and certified for the procedures being performed.

Professional liability coverage for Medi spas written by Shand can include coverage by endorsement for any physician performing services. The physician need not be a plastic surgeon or a dermatologist, but must show evidence of training in the procedures or operations being performed. The objective of Shand Morahan’s Medi spa coverage is to provide protection for both the entity and the individuals performing the services. Professional Liability coverage is written on a claims-made basis and is triggered by the reporting of an incident. General Liability coverage is also available.

A third approach is taken by Susan Preston, President, Professional Program Insurance Brokers who worked with Lloyds to develop a program specifically for Medi spas. She tells us that the syndicate she works with has a person researching this and other emerging issues on a full-time basis and is able to move quickly and respond to changes in the Medi spa community. Ms. Preston says, “The Medi spa industry is one of the fastest growing in the United States with franchises and chains expecting to grow it even more.” Ms. Preston cautions agents when comparing coverages offered by different sources to look at the claims trigger in the same way that they would with any claims-made policy. She states that some coverages use the lawsuit as the claims trigger while PPIB uses the incident as the trigger and then works through the claims process with the client.

Growth in the industry is coming from both directions. According to Ms. Preston, “Some physicians are moving out of traditional medicine to go into Medi spa ventures, on either a full or part-time basis. In other cases, traditional spas and beauty salons are converting into Medi spas and then bringing in a physician.” The industry growth caused PPIB’s premium volume to double between 2004 and 2006 and it expects it to double again between 2006 and 2008.

What treatments are currently being covered? Most insurers cover medical treatments such as microdermabrasion, laser procedures, Botox and collagen injections, chemical peels, electrolysis, micropigmentation and massage therapy. According to Ms. Byrd, other treatments may or may not be covered, depending on how the policy is actually written, who provides the coverage and their level of experience. Some policies list the procedures covered. Others list the coverages excluded.

From the insurance standpoint, Ms. Byrd states that coverage availability is not restricted geographically. Ms. Preston points out that the real geographic concern is more about licensing procedures. Since Medi spas are new, regulations and licensing are not keeping up with the number and nature of procedures offered. As an example she points out that, “physician's assistants can do filler, Botox and laser procedures in California; and in New York lasers can be used without any licensing.” An insurance policy must be reviewed carefully to determine restrictions relating to licensing and who can provide a particular service. Rapidly expanding operations may not realize that licensing violations can adversely affect their insurance coverage.

The Medi spa industry is here to stay but will not be predictable for many years to come. According to the International Medical Spa Association, the number of spas doubled between 2002 and 2004 and it anticipates that the growth rate will continue.