This report originally appeared in the July 2009 issue of DOTmed Business News

Insurance underwriters and brokers who deal in the highly specialized medical equipment industry have a somewhat safe harbor from the wilder fluctuations of the general insurance market, but a stormier scenario may be inevitable if economic pressures don't let up and proposed legislation succeeds in altering the legal landscape of medical device liability.

A number of insurance carriers won't touch the medical industry because of the implied risks, which forces brokers to work that much harder to find the right match for medical industry professionals. Despite carriers' hesitancy, brokers like Jack Mann, CEO of Mann Insurance, find the medical industry to be associated with nominal long-term financial losses. Mann Insurance is a national underwriter and broker specializing in general and professional liability, property and other policies for OEMs, ISOs and medical practitioners. Mann has been in the insurance industry since 1976 and was involved in the first program for medical dealers.
"All insurance is based on loss ratios," says Mann. "Businesses that sell or service medical equipment have generated less than a 5% loss ratio for over thirty years. What that proves to an insurance company is that medical equipment businesses are profitable on the books. It's not just us. I think historically you're going to see -- except for Medtronic and your occasional shock loss -- that this rings true."

Medtronic, a leading medical technology manufacturer, has had a difficult few years with some of its products, including a lead wire to an implanted defibrillator, which was recalled in October 2007 and has been linked to several deaths and a failed inflatable coronary catheter, resulting in the Supreme Court case Riegel v. Medtronic.

Tough times for insurance providers, but premiums remain low

In the symbiotic relationship between the insurer and the insured, a shaky economy can spell increased competition and lower premiums as insurance providers struggle to keep companies on their rosters.

"Our overall volume has declined because our clients are seeing a reduction in their business," says Dan Schneider, Principal of The Schneider Group, an insurance brokerage and underwriting firm that has served medical device sales and service organizations across the country for more than 20 years.

Many OEM and ISO insurance providers are seeing a drop in their renewal business as clients increasingly play the field looking to find the best deal, but insurance companies are staying level by picking up new accounts with more competitive rates.

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