The health and fitness industry is dominated by small to medium operations. These operations tend to be very nimble in adjusting to changes in current trends in order to stay in business. There are many non-employer enterprises that use trainers and other individuals who freelance as well as work as independent contractors at different clubs.

Health and fitness facilities are always in motion. They must both keep current clients happy and add new features in order to reach out to and attract more customers. If a facility does not offer the latest or trendiest class, another facility will lure its clients away.

Rock climbing walls, sparring rings, swimming pools, kettlebells, spinning, Zumba, and Pilates are just a few of the current offerings. Old methods are quickly discarded as new ones are picked up.

Personal trainers, masseuses, nutritionists, and other consultants are available to work with clients for a charge. Independent contractors often provide these services. They may work at only one facility or many facilities, and even provide at-home services.

As the facility owner tries to balance the needs of new clients versus existing clients  a key challenge is how to protect the inexperienced client from being injured by attempting activities meant for more experienced ones.

Here is a possible loss scenario:

Owen and Audrey are ready for a change. They have switched from cooking shows to the Biggest Loser, are motivated to lose some weight, and join Fit ‘n’ Trim Fitness Center. They know the trainers there can make the difference. They carefully consider their options, and choose Brad to guide them on their way. During their third session, Brad ramps up the incline on the treadmill and Owen slips backwards. He reaches out to break his fall and catches Audrey, causing both of them to fall. The ambulance is called and both are treated for pulled muscles and closed head injuries.

Owen and Audrey decide to return to their cooking shows and also to sue Fit ‘n’ Trim and Brad. The Fit ‘n’ Trim suit alleges that the equipment was placed incorrectly and was too close to other equipment, allowing Owen to grab Audrey. It was also too close to the wall, and that caused the closed head injuries. They sue Brad for pushing Owen beyond his capabilities.

The health and fitness industry consists of a variety of individuals and businesses that strive to help people become healthier. The insurance industry is very interested in providing the coverage needed to keep the health and fitness industry healthy. The first part of providing the coverage is to understand the exposures and the markets interested in insuring them.

David A. Palmer, Senior Broker at Burns & Wilcox, says, “Like most service industries, clubs are always trying to reinvent themselves. Joe Gold, the founder and former owner of Gold’s Gyms, would never have envisioned salons in his clubs. His clubs were into sweating and a true physical workout, not ‘fluff items.’ Many health and fitness clubs today are trying to be one-stop facilities.”

“We write a wide variety of exercise and fitness facilities,” says Jennie Carr, Commercial Underwriter for Arlington/Roe & Co., Inc., “including those with childcare exposures, physical therapists, nutritionists, pools, massage operations, juice and snack bars, tanning and toning. We also write physical trainers, martial arts studios, yoga, Pilates, racquetball, etc. We look at 24-hour locations, climbing walls, and indoor sports courts. Finally, I am starting to see more niche market options like pole dancing classes, hula hoop classes, and Zumba.”

David Lehman, Commercial Underwriter for Roush Insurance Services, Inc., arranges coverage for aerobic studios, exercise and health clubs, personal trainers, masseuses/massage parlors, dance studios, weight lifting gyms, climbing walls, aquatic centers, physical therapists, tai chi, and yoga studios.

Mr. Decker says, “We write the entire range of health and fitness facilities, from the small personal training, yoga, and Pilates studio all the way up to the large national chains and full-service health and fitness clubs. We also write individual policies for fitness, yoga, and other types of instructors.”

Coverage is written in both admitted and non-admitted markets. Western World, USLI, Scottsdale, Northfield, RSUI, Philadelphia, Century Insurance Group, Markel, Lloyd’s, and USF Insurance Companies are some of the companies that provide coverage.

According to Mr. Lehman, “Key exposures include premises liability, professional liability, and the use of personal trainers, masseuses, and physical therapists. Slip and fall and bodily injury claims are usually the most frequent and severe.”

Ms. Carr adds, “Slip and fall exposures are high, especially for risks with shower or pool facilities. Theft claims are much more common in 24-hour facilities.”

Another significant exposure, according to Mr. Palmer, is people working beyond their capabilities.

Mr. Decker explains, “The key exposures from a liability standpoint are premises slips and falls that occur in showers, gym floors, pools, saunas, and parking lots. In addition, there is equipment malfunction/misuse, liability from improper instruction, injury from working out, abuse arising out of one-on-one interaction, inadequate childcare supervision, and exposures arising out of pools.”

General liability and professional liability are the two most important coverages for any health and fitness operation. Limits of $1,000,000/$2,000,000 are common. Higher primary limits can be purchased, and higher limits are also available through umbrella or excess coverage.

There are some significant potential coverage gaps. Sexual abuse and molestation may be excluded or be subject to comparatively low sub-limits. Coverage for tanning beds may not be provided at all. Medical payments coverage may not be available for clients. Defense coverage may also be limited.

In addition, there may be activity-specific exclusions. This could mean that, while a facility might be covered for most injuries that occur, it might not be covered for injuries arising out of, say, martial arts activities.

Other important coverages are property, inland marine, auto, cyber liability, and employee benefits liability.

The overall market for health and fitness facilities is wide open. However, according to Ms. Carr, “Risks that involve boxing or martial arts that offer sparring can be difficult to place. Facilities that have high diving boards or water slides, trampolines, or off-site nature expeditions can also be tough to write."

Mr. Lehman says, “Capacity, competition, and pricing have been stable for the last couple of years. The programs offered by the companies we represent have not changed much, and I do not anticipate any changes for the rest of the year.”

That consistency is the mark of a competitive marketplace. Mr. Palmer says, “Having been involved with this class for over 20 years, I see coverages continuing to be enhanced while pricing remains highly competitive. There does not appear to be any letup in sight regarding overall competition for the class.”

Mr. Decker says, “Capacity remains strong. Multiple players continue to provide various alternatives for health and fitness clubs. Competition is difficult, as many carriers continue to buy business. Like any other commodity, there is a price where you make money and a price where you lose it. Insurance is no different. We have identified the appropriate rates for our book and will not compromise to buy an account, regardless of its loss history.”

Because of this competitive marketplace, insurance is not the major concern for owners of health and fitness facilities. Their main interest is staying in business. Ms. Carr explains, “The issue that I see as a challenge for this line is the weather. In the Midwest, where I focus my attention, as the weather gets warmer, health facilities have more difficulty keeping their clientele indoors. More and more people elect to exercise outdoors for free.”

Would you like to accomplish two goals at once? You could start a personal exercise program and also write a new client!

Mr. Palmer explains it best. “As with any class, you must know the health and fitness class and understand its inherent exposures. It’s good if you know the owner of a club where you work out. Perhaps that owner owns another club or two. However, the only way to capture business in this class is to be well informed and well connected.”