As medical spas continue to grow in the U.S. and Canada, one type of service appears to be in high demand: weight loss treatments. With well-known drugs like Ozempic and Wegovy in short supply in many areas, some medspas have been filling the gap by offering semaglutide injections to their customers. Recent reports highlight medspas in Iowa, Missouri and other states offering weight loss treatments, while more standard services like Botox injections and chemical peels continue to expand.
“We have definitely seen massive growth in the medspa industry over the past two years,” said Erin Pritchett, Broker, Professional Liability, Burns & Wilcox, Farmington Hills, Michigan. “The majority of the spas we insure started as only offering Botox and fillers as their main services. Over the past year, we have seen most of these spas add the popular IV therapies and weight loss offerings to their menu of services.”
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The range of services offered, and the potential risks involved mean that insurance for these businesses is “extremely specialized,” said Lily Chetosky, Broker, Professional Liability, Burns & Wilcox, Chicago, Illinois. Necessary policies often include Medical Professional Liability Insurance and Commercial General Liability (CGL) Insurance.
“Society has this ‘perfectionism’ mindset, which suggests trying to look your best 24/7. The growth of medical spas is no surprise,” Chetosky said. “They are targeted to individuals who want to make a change in their appearance. It is a fascinating combination of modern medicine and aesthetics.”
Medspas aim to be ‘one-stop shop’ for health, wellness
In June, the American Med Spa Association released an article describing the “somewhat unusual” legal and regulatory situation surrounding weight loss drugs and encouraging medspas to be “very deliberate and conscious of compliance” if these treatments are offered. Pharmaceutical company Novo Nordisk recently filed a lawsuit against multiple medical spas, wellness clinics and pharmacies, alleging they sold products that claimed to contain semaglutide but that were up to 24% impure, Forbes reported in May. “If [a medspa] is prescribing weight loss medications, it is extremely important they are aware of the compounding agents versus non-compounded drugs,” Chetosky said.
Aside from potential legal issues over compounded versions of weight loss medications, any medspa offering medical weight loss treatments should ensure they meet all regulatory requirements and have properly trained and licensed staff handling the treatments.
“Many of these services are growing so fast that spas cannot keep up with the proper consents, training, and personnel,” Chetosky said. “Customers want the best outcomes. They expect providers to be experts in all services being offered. The providers must stay on top of each service and manage customers’ expectations.”
Many of these services are growing so fast that spas cannot keep up with the proper consents, training, and personnel.
While weight loss injections are not offered as a medspa service in Canada, the market for other treatments is booming and more clinics continue to open up, said Abby Egeh, Senior Underwriter, Professional Liability, Burns & Wilcox, Toronto, Ontario.
“We do not see medspas offering weight loss treatments the way they are in the states, primarily due to regulatory issues, but the industry as a whole seems to be expanding rapidly in Canada,” she said. “We write quite a few of those accounts.”
Overall, the global medical spa market was estimated at $16.5 billion in 2023 and is expected to reach $45 billion by 2030, according to the Medical Spa – Global Strategic Business Report released in April. Trends in Canada include continued growth of Botox and laser services, in addition to the entrance of physiotherapy, massage therapy, Reiki and other holistic services — with many medspas aiming to become “a one-stop shop for health and wellness,” Egeh said.
Insurance can cover injuries, errors
From a risk perspective, Egeh explained, “we are always really concerned about the qualifications of the proprietors, and we want to make sure they have the correct qualifications to be operating.”
In the U.S., while Pritchett has not yet seen any claims related to semaglutide injections, incidents involving laser treatments are a known risk in the industry. In June, WHDH-TV in Boston reported on multiple patient incidents linked to medical spas, including burned skin from laser treatments as well as Botox complications. A company’s Medical Professional Liability Insurance, also known as Medical Malpractice Insurance, could respond to these claims and cover legal defense, patient medical expenses, and more. “An example of a claim would be a spa doing facial lasers or chemical peels,” Chetosky said. “We have seen situations where the service burns a patient’s skin, resulting in a claim.”
One claim could cost someone their entire business, so not having insurance coverage is definitely not a path anyone should take.
Laser treatments are generally “the main loss drivers in this industry,” Pritchett noted. “Insurance carriers have higher rates and higher minimum premiums for spas that have laser exposures. Regardless of the current claims or lack of claims we have personally seen, one claim could cost someone their entire business, so not having insurance coverage is definitely not a path anyone should take.”
The risk of a professional error leading to an injury is magnified when staff are not properly trained to perform services. “One of the greatest risks is a medspa where they are not fully qualified to be performing the services,” Egeh said. “We see a lot of new medical services being offered and if they are not qualified to be operating, that can result in injury to a client.”
Medspas usually purchase a combined policy that includes Medical Professional Liability Insurance, Errors & Omissions (E&O) Insurance, and CGL Insurance. “We always recommend a comprehensive Medical Professional Liability policy including Commercial General Liability. Having both of these on one form helps to avoid the risk of any gaps in coverage,” Pritchett said. “Professional Liability Insurance can provide financial protection if you are sued as a result of alleged failures, negligence, or errors in your professional services. These policies will provide defense even if you are not found to be negligent.”
In addition, Sexual Abuse and Molestation Insurance is “highly sought-after in this space,” Chetosky said. Other insurance policies that may be important for medspas include Cyber and Privacy Liability Insurance and Commercial Property Insurance, Egeh said.
‘One claim’ could shut down business
The wording on these policies is important, Egeh said, and business owners should pay close attention to what is covered and what is excluded. “We look to have a comprehensive policy that provides robust coverage for insureds. It is really important for business owners to be reviewing their wording to make sure they have the correct wording in place,” she said. “Their broker should be aware of all the services they are providing and advise them on all the appropriate coverages.”
Without the right coverage, a bodily injury claim, “could be a pretty huge financial loss,” Egeh added. “Medspas want to make sure they have the correct insurance coverage and staff qualifications in place,” Egeh said.
With the rise of medical weight loss treatments, insurance carriers will “want to be certain that they are getting prescribed to the right candidates,” Chetosky noted. “They want to confirm that the provider is properly screening patients and monitoring them on these drugs,” she said. “Losses in this space can be vast, from a ‘Botox gone wrong’ to a more serious exposure like a BBL that is a surgery involving full anesthesia.”
Seeking out the right insurance coverage is a key step in protecting a medspa business, Pritchett pointed out. After all, she said, “one claim could cost you your entire business.”
“It is a necessary and minimal cost compared to what financial loss you could experience without it,” Pritchett said. “Operating without the proper coverage is not worth it.”
Insurance coverage “ensures you can provide your patients the best care while not having to worry about the future,” Chetosky added. “It allows the owner to capitalize on the medical spa trend while having a team of experts behind the scenes work on the claims and insurance,” she said. “This is a non-negotiable when trying to open up your own medical spa.”
