Nice Nails

Many lines of commercial insurance are facing a soft market, and despite the insurance market’s and nation’s economic woes, insurance industry professionals say it’s difficult to chip away at the nail salon business.

There are approximately 58,000 nail salons nationwide, employing about 348,000 nail technicians, according to Hannah Lee, executive editor for Nails Magazine, a business publication for professional nail technicians and salon owners. While those numbers have remained fairly consistent during the past two to three years, Lee said the number has grown substantially in the past decade. In fact, Americans now spend about $6.16 billion in nail services. Although that amount is down a little from the past year because of the economy, the nail business is fairly resilient, she indicated.

Susan Preston, president of Professional Program Insurance Brokerage (PPIB) agrees. “The salon industry is relatively recession-proof,” she said. “People might not buy a new car, a new refrigerator or a new pair of shoes in this economy, but the beauty industry is somewhat recession-proof. Almost the last thing to go is nail work, wax removal or beautician service.”

The nail salon business is attractive because claims tend to be low in frequency in terms of the number of people who go through salons, and severity also is low, said Sean Brownyard, assistant vice president of the Brownyard Group.

Brownyard and Preston said professional liability and premises liability and general liability coverages protect against such risks as nail fungus and infections, slips, and falls. But perhaps even more important than those coverages are for nail salons and their workers to be properly licensed.

Nail technicians need to be licensed to perform their services, and in some cases, the nail license is only specific to doing manicures and pedicures. It does not apply to other types of services such as waxing, and facials,” Brownyard said. For the extra services, the technician would require a cosmetology or esthetician license, he explained.

This aspect of licensing is often misunderstood, said Frank Monaco, program manager for the Brownyard Group. “Nail salon owners may believe they’re adequately licensed for business, but the technician that’s performing the service may not be properly licensed. If the technician takes out a razor and removes calluses, dead skin or a wart, that’s outside the scope of a nail technician license, and if there is a claim, there would be no coverage under the professional liability policy.”

Ultimately, it’s key for nail salons to know what requirements are required for licensing and what insurance coverages they are required to have by state and local law, Brownyard said. Because once the licenses and coverages are in place, claims tend to be relatively minor and easy to settle, he said.

Claims generally are a few hundred dollars, up to about $5,000. They’re not typically five-figure,” Brownyard said.

Preston said claims rarely top $50,000. The worst case scenario typically is that either the entire nail or part of the nail chips or breaks, which can risk pain and infection. “I suppose you could cut a cuticle too close, but for the most part, those are pretty minor things for a salon,” she said. Slips and falls can be a concern, especially when women wear stilettos in the salon, Preston said, noting that risk is covered under a general liability policy. But more often than not, claims are rarely serious, and salon owners typically make-good on mistakes to maintain their customer relationships. Thus, mishaps rarely lead to claims, she said.

“Many customers tend to be regular customers and know the salon owners, so they are adverse to submitting a claim,” Brownyard explained. “Instead of hiring an attorney, salons will often offer to customers discounts or other services at no charge. We may have an investigator look at the situation to be aware of it, but it often doesn’t lead to financial consideration because the claimant is quite satisfied with another pedicure.”