Over the past year, there have been numerous carriers that specialize in the senior living space that have evacuated the market and are no longer writing coverage. Although there have been mixed messages, it is expected that more carriers will cease writing senior living and long term care accounts depending on various circumstances such as if the company is for-profit or not-for-profit and the level of specialization a care facility provides.
Why the exodus? The average frequency and severity per claim is steadily increasing. In fact, the average severity of an assisted living and memory care community claim surpasses the average skilled nursing claim. Falls continue to be the largest percentage of claims with unmonitored or unwitnessed falls occurring at an epidemic rate. The industry is also experiencing larger percentages of closed claims for pressure injuries, improper care, medication error, failure to monitor and resident abuse. These can all result in very high indemnity payments to claimants which puts profitability pressure on insurance carriers.
Due to these factors, the administrators at senior living communities will need to have serious discussions with their insurance brokers as they budget for property and liability insurance. In addition to increasing rates, carriers may want to add and/or increase their general & professional liability deductible.
The administrators of senior living and long term care facilities are charged with creating and maintaining a safe environment for residents and employees as well as effective leadership, communication to families, staff retention, and financial stability. The insurance policies that protect your facility play a significant role in all of these responsibilities. So, what can you do to weather the continued pressure of the hardening insurance market?
- Seek multiple proposals from insurance carriers and be sure to allow a long lead time for this process as the underwriters will require detailed information.
- Collaborate with both your insurance broker and insurance provider regularly for guidance on effective ways to reduce risk. In addition to having the potential to reduce claims and improve your bottom line, this will help empower employees and residents to feel safe knowing that leadership is invested in everyone’s well-being.
- Be wary of moving from an occurrence-based liability policy to a claims made form. While it may appear to provide savings, it can hurt you in the long-run. A claims made form should be a last resort. Work with an experienced and knowledgeable broker to ensure you understand the mechanics of the “rate steps” as well as claim reporting, retroactive date and tail coverage provisions.
- If possible, use same insurance carrier for multi-coverage lines such as general and professional liability, property, auto and umbrella policies.
As the Baby Boomer generation ages, the senior care industry will continue to be in high-demand. Organizational culture and values stemming from leadership will be critical in attracting residents and staff. The right insurance protection can help you create and maintain a rewarding and safe environment.
Insurance products offered through Univest Insurance, LLC, a licensed insurance agency affiliate of Univest Financial Corporation, are obligations of and underwritten by unaffiliated insurance companies. They are not insured by the FDIC or any other agency of the United States and are not deposits of or guaranteed by any bank.