Underwriters enjoy wellness industry benefits

Health and Wellbeing

The wellness sector is booming, but high consumer expectations and a growing compensation culture mean that liability insurance remains an essential purchase for spa resorts, health, fitness and beauty businesses.

Healthy trend

Whether it is to de-stress, lose weight, get fit or improve the way we look, more and more of us are turning to the wellness sector. Non-profit research institute SRI International estimates that there are around 289 million wellness consumers worldwide.

Hotels, spa resorts and specialist clinics are increasingly offering an ever wider range of products and services under the wellness banner. In particular UK spa resorts have enjoyed a renaissance of late, with the long awaited return of a natural thermal spa in Bath attracting over 200,000 visitors a year.

The industry – which includes the fitness and weight loss sectors, therapies like massage, beauty treatments, alternative medicines, right up to dental and cosmetic surgery – is big business.

Estimates from SRI International put global revenues at $2 trillion – the beauty and fitness industries are worth over $1trn alone, while the spa sector generates and estimated $60bn, and wellness and medical tourism $106bn.

Growth industry

The sector is growing, driven by longer life spans and growing concern for health and fitness – and the wellness boom is not just a passing fad for the Baby Boomer generation. There is a large and growing younger generation of consumers interested in wellness in addition to an as-yet untapped local market in Asia and Latin America.

“The wellness sector continues to grow,” says Asgar Hassanali of Lockton, which arranges insurance cover for spas, hotels and health clubs. “Almost every large hotel will now have a spa – it has become as important to their business as providing food.”

The sector has also become a growth area for insurers, said Hassanali. Lockton also provides insurance for cosmetic surgeries, homoeopaths, and regulated therapies such as chiropractors, osteopaths and physiotherapists.

“The sophisticated large organisations with wellness products and services are increasingly looking to insurers and brokers for risk management support and insurance,” he says.
Risk and insurance awareness

Standards in the wellness sector have improved greatly in recent years, according to Hassanali. Insurers and brokers have helped the sector raise standards and improve risk management by promoting best practices and acknowledging the benefits of membership of a professional body, he adds.

“Most large corporate providers of wellness treatments – such as spas, clinics and hotel groups – have sophisticated risk management in place. Getting their insurance and risk management right is part of their business,” says Hassanali.

Following a decade of improving standards, there is also a good system of registration and accreditation of therapists, which in turn helps commercial operators pick and choose the best therapists.

Compensation culture

Most of the ‘feel-good’ wellness therapies are relatively low risk if the therapist has been adequately trained, says Hassanali. However, problems arise when customers seek a wellness solution for a medical problem. To date there has been a distinct barrier between medical and leisure therapies, however when this becomes blurred it causes problems, says Hassanali.

There have been some expensive claim settlements in recent years where a massage has aggravated an existing condition, leading to paralysis. There has also been an instance where a customer sought treatment for a tumour through alternative therapy, when early medical diagnosis could have improved the outcome. However, such claims are rare, says Hassanali.

There have also been a number of high profile cases where customers have not been happy with the after effects of high street beauty treatments such as Botox. “It may work for most people most of the time, but when it goes wrong it can result in serious consequences,” says Hassanali.

Day time television advertising ‘no win no fee’ legal services and media reports of compensation pay-outs for when treatments go wrong are driving more personal injury claims, said Hassanali.

“Consumers are growing more inclined to seek compensation when therapies and treatments go wrong or fail to live up to their expectations,” says Hassanali. “They are becoming more demanding and their expectations are increasing. If they pay for a treatment they expect results.”

Comprehensive coverage

Historically spas and hotels have relied on therapists’ own professional liability insurance, but increasingly resorts are buying one policy to protect against personal injury claims from customers. The majority of commercial health and wellness organisations now buy robust contingent insurance packages or look to cover all the liability risks under one policy, says Hassanali.

“We are encouraging clients to bring all their liability insurance into one policy. It is the right thing to do and is more comprehensive than constantly keeping on top of therapists contact details and insurance arrangements.”

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