IVF Clinics Face Insurance Complexities

Healthcare organizations create comprehensive risk management strategies to ensure patient safety, data privacy, regulatory compliance, and more. For in vitro fertilization (IVF) clinics, this planning has grown increasingly complex. Unfortunately, no catchall insurance policy encompasses all the risks associated with IVF activities and equipment. So, IVF clinics and sperm banks need to map their specific risks against existing insurance policies to identify coverage gaps. Consider these exposures:

Tissue intake and coverage limitations 

IVF clinics collect, work with, and store human tissue in connection with fertility treatments. Tissue intake can involve freezing sperm, eggs, and fertilized eggs in cryotanks. A mechanical failure in a tank can compromise the tissue, rendering it unusable. 

Obtaining insurance for this exposure can be challenging, because calculating and pricing coverage requires quantifying the tissue value. How do you put a price tag on eggs, sperm, and embryos? The perceived value varies from person to person and can depend on circumstances.

IVF clinics historically have managed this risk by bearing the cost of recreating the lost tissue through additional donations or alternative solutions. However, this doesn’t address scenarios such as divorce, death, or other unforeseen circumstances, further complicating the valuation process. Some patients may think, “My opportunity to get pregnant or to save part of me is gone.” There’s no way to value that loss. 

The commercial insurance market provides limited coverage for tissue intake due to the difficulty in determining appropriate compensation.  

Lab mix-ups and broken dreams 

IVF clinics have procedures and protocols to deliver a high standard of care, but human error can lead to an honest mistake. Perhaps, due to a process mishap, a technician inadvertently fertilizes an egg with the wrong sperm. Or a woman ends up with the wrong embryo in her uterus. 

How does an insurer value the pain and suffering of the individuals involved or the legal complexities of making an error with genetic material? How do you price reputational risk? One high-profile mistake can threaten an IVF clinic’s survival.

Intense emotions and sympathetic juries 

By the time an individual or couple enters an IVF clinic, they often feel emotionally raw. Some scrape together funds to cover the cost, desperate to start a biological family. 

Emotions and financial stress together can amplify the potential for litigation. Add a tank failure or procedural mistake that dashes the patient’s hope, and you have a potential recipe for a nuclear verdict. Also, IVF involves touching patients in intimate areas, creating the possibility of molestation claims.  

Insurance coverage and risk management considerations for IVF clinics 

The largest claim losses for IVF clinics come from tank failures. As a result, property and casualty insurers generally exclude these tanks when underwriting insurance. Similarly, employment practices liability (EPL) policies typically exclude molestation. 

So, it’s vital to catalog your risks and then review all your policies to see how your coverages would respond to each exposure. Do you have overlapping coverage where two policies might work together to cover a claim? Conversely, do you have coverage gaps that will require you to pay certain claims out of pocket? If yes, are you comfortable self-insuring these risks, or do you need to explore alternative risk financing? 

In particular, look at the interplay between these coverages:  

• Directors and officers (D&O) insurance shields healthcare directors and officers from claims of mismanagement, negligence, or breaches of fiduciary duty. It covers alleged wrongful acts related to IVF decisions, regulatory compliance, financial oversight, and more. The policy also covers certain legal defense costs and helps preserve the organization's reputation. Some policies include entity coverage, protecting the healthcare organization itself in IVF-related claims. 
• Cyber liability insurance protects against data breaches, cyberattacks, and financial losses from cybersecurity incidents. It covers costs related to data breaches, ransomware attacks, business interruptions, legal liabilities, and helps ensure compliance with healthcare regulations. With the increasing reliance on technology and patient data, it safeguards the IVF clinic's reputation and financial stability. 
• Property and casualty (P&C) insurance may provide some coverage for tissue spoilage. It also covers physical property damage, business interruption, general and professional liability, and product liability. You’ll also have financial protection for your clinic's assets, operations, and reputation.
• Medical malpractice (Med Mal) furnishes coverage for certain legal and settlement costs, and potentially pays damages if a court finds you liable for malpractice. 

Safeguarding and staying informed 

IVF clinics have unique risk exposures. So, you’ll want to collaborate with an internal and/or external risk management professional who understands the full picture. Review your exposures and assess insurance adequacy at least once a year, ideally 120 days prior to your insurance renewal date. These periodic analyses will help protect your clinic from potential liabilities and safeguard your patients' best interests.