Aon | Financial Services Group
Industry Spotlight - Healthcare
The Financial Services Group at Aon serves companies in the healthcare sector, including physician groups, individual hospitals, senior care facilities, managed care organizations, ambulatory care, and healthcare systems including university-affiliated, and private and nonprofits.
The sector faces unique risk and human capital challenges. By keeping abreast of healthcare exposures and trends in the insurance market, Aon can implement a data-driven diagnostic broking process.
Antitrust and regulatory exposures contribute to significant directors and officers liability (D&O) losses in the sector, as the Department of Justice and Federal Trade Commission continue to investigate merger and acquisition activity. The intensity of these investigations can vary by presidential administration and contribute to the volatile political and economic landscape navigated by healthcare companies. Physician claims, provider selection allegations, credentialing issues, False Claims Act matters, opioid claim activity, cyber exposure, and excessive fee litigation are also leading exposures for healthcare management liability programs.
The sector also faces staffing challenges related to hiring and retaining employees and increased costs related to clinical staff. These strains are exacerbated by the recent marked increase in workplace violence, hostile patient encounters, and clinician fatigue. These factors heighten the sector’s employment practices liability exposure and add significant inflationary costs, impacting earnings and profitability and may make the sector more vulnerable to shareholder litigation, antitrust litigation, and regulatory activity in the D&O space, as many organizations push price increases to keep up with rising costs.
As the result of the significant COVID-19 related lawsuits impacting the sector, healthcare companies have been uniquely affected by the pandemic. Direct suits related to management of the health crisis and patient care, as well as indirect exposures, such as bankruptcy and antitrust litigation, have added to the financial stress the pandemic has placed on health systems.
Due to these unique exposures, the management liability insurance underwriting appetite in the sector is narrower than the broader market causing insurers to scrutinize:
- Trends in provider credentialling, market share, overnight stays and other patient metrics.
- Communications with regulators when undergoing M&A activity and setting rates.
- Controls around the implementation of vaccine mandates.
- Fiduciary excessive fee exposure mitigation.
- Overall employment relations and policies.
- ESG initiatives.
