Health professionals know that if they work in any area of direct patient care Professional Indemnity (PI) insurance is essential and in many countries PI insurance is also a legal requirement to protect the patients, sometimes insurance is provided by the employer and other times the health professional needs to provide their own insurance. Prior to providing insurance cover professional liability insurance providers (also called malpractice or professional indemnity insurance in some locations) asses their risk on the basis of the level of risk associated with the area of practice and the qualifications of the professional.

Those who are working in the personal services sector are sometimes providing services that encroach on scope of practice of the health professionals yet in many locations professional liability insurance is not a legal requirement for all personal service providers, this legislative gap creates uncertainty for both the service providers and their clients. Several of the medical professionals that we have spoken with have expressed concern about some of the broadening areas of practice of the personal services industry particularly cosmetic services which they feel sometimes encroach on the field of medical practice, some medical professionals believe that certain services should be restricted by law to those with a medical degree.

Regardless of whether you agree or disagree with the medical professionals it is undeniable that all personal services have associated risks and arguably some services have risks that are not too dissimilar to those of minor medical procedures particularly if the service is invasive, these arguments are likely to carry more weight for the legislators in circumstances where the clients/patients are not protected by professional liability insurance.

Why don't all personal service providers have insurance?

There are several reasons that have been provided to us by those without insurance, sometimes the service provider does not carry insurance simply because they are not required to by law and either they do not wish to incur the expense or they lack a balanced perspective about their areas of risk. Some service providers have told us that they do have professional liability insurance but they also provide some services (which they feel can be provided with due care) that their insurer will not provide insurance cover for, this is extremely unfortunate for both service provider and their clients because it creates uncertainty and unnecessary risk for both parties.

The commonest reason that we have been provided for a lack of insurance is that the insurers have declined insurance cover after they have examined the credentials of the service provider, overwhelmingly this seems to occur in situations where the service provider has attended a demonstration class offered by a demonstrator visiting from overseas. Sometimes after paying thousands of dollars to attend a training/demonstration event and being awarded a certificate the participant discovers after that in the absence of other qualifications the certificate is unacceptable to their insurer. In other words if the service provider already has existing qualifications the insurer may be prepared to expand their cover to other services because of their existing qualifications but for those who do not have any existing qualifications the insurer has evaluated the new certificate and declined cover.


Why do the insurers sometimes decline to provide cover?

Insurers manage their financial risk by careful evaluation of their exposure to claims liability as compared to past events, part of the evaluation with personal services is evaluating the quality of training, in many circumstances visiting demonstrators do not hold valid qualifications in training and assessment that would be considered applicable to local standards therefore the insurer considers the demonstration/training/certificate to be insufficient to meet their requirements for credentials.

An insurance broker summed it succinctly "The insurers look at some certificates and say this is a nice piece of decorative wallpaper but sorry their insurance application is declined".


Several technicians have contacted us requesting assistance with obtaining insurance cover because they attended a demonstration/training event offered by an overseas demonstrator only to discover afterwards that insurers declined to provide cover insurance cover. Regretably there is no replacement for valid training and attempts to obtain refunds can be very difficult after the visting demonstrator has left the country.

How large could a claim be against a personal services provider?

The extent of financial liability for uninsured service providers is only limited by their assets and future earning capacity, take a pause and think carefully about this sentence because some of the claims for compensation for adverse outcomes from relatively minor cosmetic procedures have been extremely high, a recent judgement in Australia was for over $1 Million.

For many small business owners if they had a claim against them involving a major court case their legal fees alone could force them into bankruptcy let lone the claim itself and in some circumstances bankruptcy might not get them off the hook for what they owe. Lack of insurance cover could also be a major problem for a client who may find themselves with a valid claim but an inability to recoup enough to even cover their own legal fees if the service provider has no assets.

Training / Demonstration Events

A subject of particular concern is when demonstration/training events are held without insurance cover by the event organiser or the demonstrator; this places the event organiser, the demonstrator, event participants and any models at risk. We know instances where this has been taking place here in Australia most often associated with visiting demonstrators and it should be of concern to the industry.

Duty of Disclosure

Do event organisers, demonstrators and service providers have a duty to disclose to their event participants, models and clients that;

• They do not hold training and assessment qualifications in the location where the event is being held?
   
• They do not have professional liability/event insurance?
   
• The certificates they provide may be rejected by local insurers?

The answer to these questions will depend on your local laws and the outcome of prior cases of a similar nature, ultimately it may require the judgement of a court to decide in an individual case if a duty of disclosure has been breached but it would be best to assume that frank open disclosure is always the best policy. Event participants, models and clients should always ask if insurance exists before agreeing to participate or agreeing to book services. If in doubt ask for evidence of insurance.

Ask Your Insurer

If you are thinking about spending money on a demonstration/training event then the most sensible course of action would be before you enrol to ask your insurer if your existing qualification plus the new certificate that is being offered would be sufficient for them to provide you professional liability insurance for the services that you would like to provide, or does the insurer think that the certificate being offered is merely a piece of decorative wallpaper?
 

Date of most recent revision: 07/10/2016 (mutatis mutandis)
Original publication date: 07/10/2016

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