Two advances occurring in tandem at the present time could expose medical equipment products manufacturers and suppliers to losses.

One advance is that medical equipment products are becoming increasingly complex. Motorized wheelchairs have replaced the traditional manual wheelchair; a continuous motion device has replaced the manual ice bag, and oxygen machines operate with backup power packs, to name just a few examples.

The other advance is the response of Medicare/Medicaid and private insurers to the expressed desire of individuals to be treated in their homes. This type of treatment is more cost-effective for the insurers and is usually more comfortable for the patient.

Taken individually, each advance is good. However, when they are combined, the advanced and complicated equipment can be overwhelming for the patient or the patient’s caregiver. Equipment failure can go undetected since there is little or no monitoring of it by professionals.

To better understand the loss potential, consider this example:

Molly lives in her own home. Although she depends on a motorized scooter to move about and 24-hour oxygen, she is able to care for herself with the help of a home health aide who visits three times a week. Her main oxygen source is power operated with a backup battery in case of an emergency. While Molly sleeps, the power at her home goes out and, due to a product malfunction, the backup battery on the oxygen fails to operate. When the home health aide arrives the next morning, she discovers Molly unconscious but alive. Molly is revived but suffers brain damage and must be institutionalized. The medical equipment product manufacturer is sued for the cost of Molly’s medical treatment, her pain and suffering and the future costs of the institutional care she must have.

The markets that write medical equipment products coverage do not limit themselves to insuring only manufacturers. They also insure distributors, retailers, importers and exporters. The experts quoted in this article place coverage for all of these, but the emphasis and level of interest varies by market.

The medical equipment products market, while limited, is nevertheless available. The market is not monolithic and depends on the type of product and the company providing the coverage. Mark D. Wood of CNA – Advanced Medical Technology, Joe Schneider of Jimcor, and Robert F. Wright of AmWINS Brokers of CA offer only nonadmitted paper. Thomas Konopka of Medmer Insurance Group provides both admitted and nonadmitted coverage, while David Oleson of VGM Insurance uses admitted coverage for the most part.

The biggest problem line is products coverage. Mr. Oleson points out that placement is difficult because, “Only a very few carriers are specializing in this coverage.” Mr. Wright counters that “It is not particularly difficult to place.” Mr. Schneider takes a middle ground saying, “Products liability can be difficult to place for invasive medical products.”

While the medical equipment product liability market is limited and placements are sometimes difficult, it becomes more difficult when the product is sold to the general public. Mr. Konopka says, “The coverage doesn’t change but the pricing does, with home use products charged a higher premium.” Mr. Woods adds that, “The coverage may not change but the exposure being underwritten does.” “Many home users are not professionals trained specifically to use the equipment and that makes the products exposures slightly greater,” according to Mr. Wright. Along the same line, Mr. Oleson presents an interesting insight when he says, “The liability risk shifts to the dealer because they are required to set up the equipment and inform the patients on how to use it properly.” A more ominous concern comes from Mr. Schneider who points out, “The potential for class action lawsuits grows, which greatly increases the exposure to the carrier.”

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