Public panic can put a hospital’s balance sheet on the critical list when patients stop coming. In response, AXIS Healthcare now offers what it calls the industry’s first business interruption and extra expense coverage for the risk of financial loss to a hospital or health care system when treating patients with highly infectious diseases.
PRODUCT: Medical catastrophe business interruption and extra expense coverage
COMPANY: AXIS Healthcare
BEST RATING: A+ (Superior)
AVAILABILITY: Coverage is available on an open-brokerage basis.
FOCUS: Public panic can put a hospital’s balance sheet on the critical list when patients stop coming. Consider Texas Health Presbyterian Hospital Dallas, where inpatient days dropped 22% and emergency room visits plunged 49% in the month after it admitted the first Ebola patient in the U.S., according to Kimber Lantry, executive vice president of AXIS Healthcare, the division of AXIS Insurance that provides professional liability insurance coverages for physician groups, hospitals, allied health care facilities and individual physicians. The event cost the hospital $20.3 million in direct revenue.
“Public fear can lead to significant revenue losses for the hospital,” Lantry explains. In response, AXIS Healthcare now offers what it calls the industry’s first business interruption and extra expense coverage for the risk of financial loss to a hospital or health care system when treating patients with highly infectious diseases.
This type of hazard can strike any hospital with an emergency room because federal law requires such hospitals to treat all patients who come through their doors. Every year seems to bring a new high-profile pathogen to light; this year, it’s the Zika virus. Transmission of the virus can occur via bodily fluids, not just mosquitoes—which means Zika has the potential to stir the kind of alarm the AXIS program contemplates.
The AXIS coverage includes infectious diseases that are known, yet to be discovered or the result of relatively benign microbes mutating into more virulent forms, Lantry says.
AXIS has long offered medical professional liability for hospitals and health care providers and views the contagion coverage as a natural way to broaden those relationships—especially since agents can initiate conversations with hospital executives about a risk that’s already on their minds.
UNDERWRITING: Coverage adheres to limits of $50 million per hospital and $50 million per major metropolitan area. This means it can cover only one hospital in any given metro region. To respond to a potential national pandemic, total available limits are $750 million—if all insureds purchased $50 million limits, only 15 hospitals would be able to buy a policy.
Coverage continues as long as 12 months after a claim is triggered, with a minimum of 10% coinsurance. Higher coinsurance and deductible options are available. Any of the following may trigger the policy: a quarantine or partial or complete shutdown of the hospital by federal, state or local authorities; 25% or more of the hospital’s personnel absent because they are afraid, ill or caring for sick family members; a 25% or greater reduction in inpatient stays; or a 25% or greater reduction in emergency room visits.
A quotation is subject to the hospital working with AXIS on a pandemic preparedness assessment in cooperation with a specialized health care risk manager, whom AXIS sends at its own expense.
MINIMUM PREMIUM: Premium is a percentage of the hospital’s net patient revenue, calculated on a sliding scale that increases with revenue.
TARGET: Any hospital or health care system with an emergency room may seek coverage. Lantry says a key question for the hospital is “Will they treat or transfer highly infectious patients?”
COVERAGE TERRITORY: all U.S. and Canadian jurisdictions
CONTACT: Kimber J. Lantry, executive vice president; AXIS Healthcare, 550 Gateway Drive, Suite 101, Napa, CA 94558; 707-226-0601
Ronimarie Acord is an IA contributor.
