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The insurance marketplace for medical and radiology diagnostic laboratories has a number of carriers. Our experts indicate that Admiral, Aspen, American Safety, CNA, Evanston, Markel, Argo Pro, James River, AIG, Hiscox, Zurich, Fireman’s Fund, One Beacon, Darwin, Colony, ACE and Lloyd’s are all potential markets for at least some exposures presented by these risks. However, breaking out the market is necessary. Mark Fintel, assistant underwriting manager at James River Insurance Company, explains, “Many laboratories are part of pathology or radiology group practices and are covered by traditional physician malpractice carriers. E&S markets do the bulk of the underwriting on independent laboratories that are separate from clinician groups.”
Coverage is written on both admitted and nonadmitted paper, according to Rob Keyser, vice president at PGI Commercial, LLC, but he says, “More are going nonadmitted.” Susan Posha, vice president at Arlington/Roe & Co., agrees and explains, “The wide range of specialty labs today makes nonadmitted a more affordable solution in many situations.“
David Derigiotis, professional lines underwriter at Burns & Wilcox, explains, ”The most common claims experienced by radiology laboratories are failure to diagnose or inaccurate diagnosis. They should generally be the burden of the doctor who ultimately diagnoses or fails to diagnose a condition after reviewing the test results.” Mr. Fintel agrees that imaging facilities have the greatest frequency of loss but adds, “The greatest severity is generally associated with pathology laboratories where employees review tissue specimens to determine if cancer is present.”
Jo Ann Taylor, executive vice president at U. S. Risk, agrees that radiology is a less hazardous exposure. She says some of the most common pathology lab claims are misdiagnosis of tests, emotional distress due to incorrect positive or negative test results, and mishandling of blood.
All of our experts pointed out that these laboratories perform tests that are part of the overall diagnosis but do not actually perform the diagnosis. Their job is to provide one piece of the puzzle that the physician uses to make a diagnosis and decisions regarding treatment. Mr. Derigiotis and Mr. Fintel both point out the need for laboratories to be aware of the professional liability coverage carried by their contracting physicians. To that end, Ms. Posha says, “Securing a certificate of the physician’s coverage is a handy tool.”
According to Mr. Keyser, every operation should purchase general liability and professional liability coverage. Mr. Derigiotis says that these coverages should be packaged together whenever possible. He provides this example. A dye injected into a patient to highlight certain areas also causes an allergic or harmful reaction. Is this a general liability claim or a professional liability claim?
All of our experts agree that sexual abuse and defense outside of limits are important coverages that are readily available.
Ms. Posha states that another coverage gap that can occur is professional liability coverage for physicians performing medical services at the laboratory. She says, “Since many policies do not cover the physicians, it is important to know the process the lab performs and how it relates to the physicians.” Mr. Fintel believes it is important to include coverage for the facility’s medical director and other non-physician personnel and vicarious coverage for the facility for both employed and contracted providers, regardless of how the providers’ direct liability is covered.
According to Mr. Derigiotis and Mr. Fintel, mobile units are also a concern because they present an automobile liability exposure in addition to the general liability and professional liability exposures. Along the same line, many laboratories have extensive hired and non-owned auto exposures that some carriers are willing to accept and that others decline.
Ms. Posha brought up a new concern. She said, “Today we see a crossover in the cyber/technology area since these results are stored and transmitted by technology. This exposure generally needs to be addressed separately from the professional liability.”
Unlike many medical malpractice liability coverage forms, markets are willing to provide coverage for medical and X-ray labs on either a claims-made or occurrence basis. The typical limits are $1 million/$3 million but excess limits up to $25 million/$25 million are available.
According to Mr. Fintel, pricing has stabilized. “Over the past three years, pricing has been driven down by the large number of carriers pursuing this class of business. Rate decreases and coverage enhancements have made this a highly competitive niche. However, pricing at the present time appears to be stabilizing to some extent and new entrants in the market have slowed.” Mr. Keyser adds, “Pricing is at the lower end of technical adequacy.”
All of our experts believe this is a growing and thriving industry virtually untouched by the current economic downturn. Individuals are moving from declining industries towards the health care field. In addition, new testing methods are being developed that will further enhance the industry’s growth.
We leave this subject with one cautionary note from Ms. Posha. “Storing, transmitting and viewing patient/customer data is a growing concern from a risk management process standpoint, and we need to be alert to solutions for these evolving liability exposures." |
