In the eyes of an insurance carrier, temporary and contract staffing tend to create distinct situations, challenges, and opportunities. Within each industry segment of staffing, insurance carriers will specifically structure coverage forms, terms and conditions, and premium pricing that will determine whether an organization fits within their risk appetite. Let’s unpack the complexity of these areas specific to the healthcare segment of staffing. Exposures fall into five categories:
- Professional Liability – Healthcare staffing agencies are responsible for credentialing and screening placed employees. The client contract will often designate the healthcare staffing agency as the responsible party if an error is made by their clinical professional (partial or exclusive). Client contracts may include indemnification wording that strongly (or entirely) favors the client company, and transfers some or all financial risk to the staffing agency.
It is imperative that the healthcare staffing agency’s professional liability policy include “vicarious liability” to cover the mistakes or inaction of the medical providers they employ.
- Cyber & Privacy Liability – Although Cyber and Privacy Liability coverage may be required by client contracts, it is crucial healthcare staffing agencies maintain such coverage to protect their own bottom-line. Regardless of hosting data “in the cloud,” in the event of a data breach, it is the responsibility of the staffing agency to protect internal records (employee name, address, SSNs, etc.).
This risk also comes from mishandling a patient’s medical chart. Client contracts may determine your agency to be responsible for some or part of a breach of data privacy if your employee is involved. Ensuring contractual obligations are balanced is imperative.
If the data is stolen or compromised, it is the staffing agency’s responsibility to cover costs for:
- Forensic and legal costs
- Business interruption and system damage
- Cyber extortion, and/or
- Social engineering
The most crucial piece to internal exposure is building strong network controls and training employees to avoid data breaches as a result of human error. Your insurance broker should assist and provide a list of controls that Cyber Liability underwriters recommend (require) to be in place.
- Abuse & Molestation – Unfortunately this sort of occurrence/accusation is happening at a more frequent rate in the healthcare industry. The cost of legal defense and awarded damages may breach costs of 6- or 7-figures. Many insurance policies will sub-limit or exclude coverage for such actions, so it is imperative to understand what coverage is afforded within your insurance policy.
- Employment Practices Liability (EPLI) – The frequency of claims for healthcare staffing (higher skill/higher wage employees) is less than that of industry segments with lower skill/lower wage employees. The highest payout for EPLI claims is higher given the annual income of the employees. This coverage protects your clinical professionals if harassed or mistreated by colleagues, employees of the client company, and even 3rd party vendors or customers of the client company.
The best defense is found in your organization’s employee handbook and should include the protections you afford to your clients within contractual agreements. If an employee files a lawsuit against your client for damages, the contract could point to indemnification language that pushes that liability back onto the staffing agency. This is exceptionally harmful if your EPLI policy does not include “client coverage,” as your insurance carrier may deny coverage or require your organization be named in the lawsuit to have insurance coverage respond on your behalf.
- Workers’ Compensation (specifically, assault against an employee) – The American Hospital Association noted in a 2023 report that 44% of nurses reported being physically assaulted. Your organization (and employee) has essentially no control over this, but an increasing exposure. This can be exceptionally punitive for healthcare staffing organizations who participate in a loss sensitive plan such as a retrospective, large deductible, or captive program.
Proper employee training to identify and avoid situations that can result in assault is key to keeping your clinical staff safe and reduce Workers’ Compensation claims as a result.
Just as the industry is rapidly evolving, the landscape of risk is changing as well. It is imperative to remain in contact with a risk advisor to ensure your contractual obligations are met, your insurance policies will respond to your obligations, and your employees remain safe. The areas that underwriters focus on are the same areas your attention should be on – not only will it enhance your bottom-line, but more importantly it will ensure the health of your employees, organization, and other stakeholders.