Fit to be Liable: Key Risks in the Fitness Industry
The fitness industry in Singapore is worth SGD 200m, and that number is probably set to grow even higher. Some trends worth noting in the last few years include digital fitness, boutique studios and personal training is on the rise. The industry also attracts many part time fitness trainers who get into the industry out of passion wanting to help others. Singapore also attracts many fitness brands from across the globe, where they use the franchise model to expand to this market.
As a result, there is a large mix of individual fitness trainers who work as contractors, independent fitness centre owners and fitness owners operating under a franchise. The main reason for self-employed fitness trainers to manage their risks is to protect their cash flow. For the fitness centre owners and operators, it would similarly be to protect their balance sheets, but also protect the reputation of the company especially in the case of larger brands.
What are the key risks for these fitness professionals and what sort of insurance should they be implementing to protect themselves?
The three main risks for all fitness professionals are related to their liabilities in terms of negligence or errors which can have significant impacts on the ability for the company or individuals to continue operating.
Professional Liability / Professional Indemnity risks
This is the risk of claims or alleged claims against fitness instructors or fitness companies due to negligence or errors as part of their professional capabilities that result in an injury to the client. This can arise from several situations, such as injury or illness caused by improper guidance, misinformation or misinterpretation of client goals or medical history, and failure to provide adequate instruction or supervision. For example, a personal training client injures their back during a training session due to an instructor's negligence or inappropriate guidance. The client may sue the instructor for compensation.
The best way to protect against this risk is to have a Professional Indemnity (PI) policy in place. Traditionally PI insurance policies only cover claims where the third parties suffer economic loss and not bodily injury harm. This is more applicable to professions such as business consultants, architects and other professional services. However more insurers are open to underwriting professions such as fitness coaches who have the risk of being sued for alleged bodily injury claims. There is also more demand for PI policies as we often see it set by the Australian and US gyms as a requirement for the franchises in Singapore.
You can take out PI cover on an individual basis which is great for independent fitness professionals. You may even by required by the gyms you contract at to have your own PI policy in place. Fitness companies will take out PI policies which automatically cover all employees. It is important to discuss with your broker whether you want to also cover the liability of subcontractors so that if a claim arises from a contractor, the policy will kick in to pay for the upfront defence costs before claiming back from the independent contractor afterwards.
Another reason to talk to your broker such as Anapi is to discuss the best way to structure the policy according to your budget and needs. For example reviewing the list of exclusions like molestation and whether you want to have it included. Also discussing whether you want to cover both the defence costs and damages, or only to have the defence costs covered.
Public Liability risk
This is the risk of potential legal and financial consequences if a member of the public (a third party) suffers injury or property damage on the fitness centre premises. It is similar to PI risks however the claims are not linked directly to professional capabilities. An example of this would be dumbbells are left lying around the gym floor and someone trips and breaks their foot on it. They sue the gym for the damages because of their negligence in maintaining a safe environment. Alternatively a fitness centre could incorrectly mount a TRX strap system to the ceiling and that accidentally causes damages the ceiling. The landlord would demand that the gym reinstate the ceiling and that could be covered under the Public Liability policy. In fact, most landlords require tenants to take this policy out to cover these sorts of incidents.
Public Liability insurance is also applicable to independent trainers, especially those who train outside such as in parks or at their clients’ premises. For example, an independent trainer accidentally damages the floor at their client’s premises whilst moving kettle bells around. They would be liable to pay for the repair costs and the insurance could cover it.
Cyber liability risk
The fitness industry collects and uses quite a lot of personal data from their clients. This includes Personal Identifiable Information (PII) such as full name, date of birth, contact details etc, Health and Fitness Information such as medical conditions, injuries, height and weight etc, Biometric Data such as heart rate, sleep data, steps taken, calories burned taken from wearable fitness devices, and Financial Information such as credit card details or banking information for payments.
Whilst many fitness centres and independent fitness trainers employ third party services such as booking and scheduling platforms to process and handle the data on their behalf, the fitness centres or individuals are ultimately responsible for their client’s data. If there is a data breach from one of the third-party platforms that contains their client’s data, the fitness centre is liable and responsible for the breach of the Personal Data Protection Act (PDPA) in Singapore and will have to pay the upfront costs first before claiming it back from the platform providers.
Cyber Liability insurance not only steps in to help with data breach response by covering the costs to notify the affected individuals, costs to engage with forensic experts to investigate the breach, the insurance also covers the liability costs. This includes the legal defence costs, investigation costs and regulatory fines such as from PDPA breaches.
It is a given that all companies regardless of industry should implement risk measures to mitigate the risk of cyber threats. This would include controls such as using strong passwords, encryption, backing up data regularly etc. Due to the fact that the fitness industry collects and uses very sensitive client data, there is a heightened risk of cyber threats and therefore cyber liability insurance should be one of the measures they implement.
By making sure you have adequate insurance coverage, you will protect your assets and reputation either as an individual trainer or a fitness centre so that you can focus on providing the best service to your clients. Anapi understands the risks that fitness professionals face and can ensure you have the right coverage needed to protect your business. Get in touch with us to see how we can help you out.
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