The call comes in on a Tuesday morning: A medical spa client is expanding into invasive procedures and wants to update its liability coverage. The broker jots down the details and reaches out to the underwriter.
Now the clock is ticking. What’s covered under the existing policy? Will the carrier approve the change — or reject it outright?
For underwriters in the small business healthcare space, these fast-moving, high-stakes decisions are routine. Every request is a puzzle, and the wrong move can ripple across an entire portfolio.
Kyle Laudadio, healthcare and life sciences practice leader for CFC, said knowing what risks to insure and how they fit into a book of business are key factors in the small business insurance market.
“In making those decisions, the underwriter must thoroughly understand the client’s business model, including its claims history, the types of professionals and level of training of the employees, safety protocols and the number of procedures performed,” he said.
Earlier this year Laudadio moderated a panel at the Crittenden Medical Liability Insurance Conference on small business insurance for healthcare entities and professionals, which addressed the challenges and benefits of this unique market.
Small business outpatient healthcare entities are seeing stronger underwriting results compared to larger industry segments, Laudadio said. However, he added, the market remains highly competitive, with carriers facing significant pressure regarding rates and service standards. Turnaround times are generally much shorter in small businesses.
“With larger accounts, you might have weeks to evaluate an account; with small businesses you often have just hours,” Laudadio said. “The key is striking the right balance between doing your diligence and offering quotes that are both prompt and competitive.”
Dan Springman, underwriting manager at Hudson Insurance Group, said because the per business premium rate is much lower in the small healthcare business market no single client has the ability to positively or negatively impact the entire portfolio.
“From an underwriting perspective, it costs an insurance company as much to underwrite a $100,000 account as it does a $1 million account, so the question is how do we lower the per transactional cost for each submission as it comes in?,” said Springman, who also served on the panel. “We also want to determine whether to underwrite the account as quickly as possible without increasing our risk of overlooking vital details.”
In today’s marketplace companies can deploy AI within the submission clearance process, Springman said.
“This lift has enabled companies to clear risks almost instantaneously, cutting down response times, while simultaneously generating detailed risk summaries that let an underwriter know if the risk fits within the targeted portfolio,” he added.
Hudson Insurance Group’s clients currently include medical spas, pharmacies, diagnostic imaging, laboratory testing, rehabilitation, home healthcare and other non-hospital entities as well as physicians and dentists.
“We focus on a handful of business classes,” Springman said. “For every client in the class, there are about five or six pieces of information that I must know to determine if the business is a good fit for the portfolio. Really narrowing down what is ‘need to know’ and eliminating what is nice to know has been invaluable in fulfilling our service value proposition.”
For example, Springman said if the business is part of the company’s home health class, he would need to know the revenues, history of its claim frequency and severity of those claims, the number of clients and/or employee count and the type of care that is provided.
“Rather than asking if an insured is providing pediatric care, we exclude it, outline the exclusion as the first items in our quote terms, and confirm the insured is comfortable with the exclusion,” he said. “This serves two purposes — one we have one fewer question that is ‘need to know,’ and two, we clearly state our intent, and get the account quoted without follow-up questions.”
Given that they don’t underwrite to a single account, Springman said they do not focus on one-off services, but focus on portfolio underwriting.
“This is what sets small business apart from large-risk underwriting,” he said.
The emphasis is on variables that have the ability to impact an entire portfolio, said Springman, i.e., systemic issues within a class of business that can affect multiple accounts at one time.
Staying up to date on medical news and trends is key in this space.
For example, many pharmacies and outsourcing facilities had been compounding versions of GLP-1 drugs used to treat diabetes and obesity.
However, in late 2024 and February 2025 respectively, the U.S. Food and Drug Administration determined that the shortages of the GLP-1 injection products — Tirzepatide and Semaglutide — had been resolved.
The FDA allowed state-licensed pharmacies to continuing compounding versions of the drugs until April 22, 2025 and the grace period for FDA-registered outsourcing facilities ended on May 22, 2025.
As a result, the compounding and sale of these products is currently prohibited in the U.S.
“The recent changes in GLP-1 regulations illustrate the need for underwriters to remain informed and diligent about market trends,” Laudadio said. “The FDA’s decision to end the shortage and providers’ ability to offer compounded alternatives is not just a client-level issue, it’s a portfolio-level exposure.”
In the non-emergency transport space, there has also been a rise in patient drop claims in recent years.
“With the rise of on-demand transport models, we’re seeing more medically fragile patients being moved by drivers who may not have the training or experience required,” Laudadio said. “Incidents such as patient drops or falls may result from improper lifting or transferring techniques, potentially causing significant injury.”
Laudadio said if you’re underwriting this class of business, you need to understand the types of patients being transported by potential insureds, their training protocols that are in place, claims history and staff turnover rates. Since the market is constantly evolving because of new treatments, emerging risks, and changing regulations, the best underwriters are the ones who spot the trends early and adjust before they become a problem, he added.
Springman said the job as underwriters and leaders in this segment of the marketplace is to drive profitable, transactional business forward.
“Our primary focus must be to take work off our client’s plate,” Springman said. “We need to make it easier to transact business, limit the number of touches any single account can drive, and reduce the friction points as much as possible. We want to make it easy to ingest, quote and bind the accounts our client partners send us.”
