Resident falls claims continue to be the primary insurance loss driver for senior living providers, according to a new report.
The report from Oliver Wyman and Marsh, “2022 General and Professional Liability Report for Senior Living and Long-Term Care Providers,” offers insights into national and state-specific trends driving claim costs, severity and frequency within senior living and skilled nursing.
Resident falls, by far, continue to be the leading driver of claims in senior living, representing 75% of total claims closed with payment, with more than $225 million in paid indemnity and expense and a closed claim severity of $189,129 (based on the 2023 cost level), according to the report. By comparison, abuse, with the second most total claims closed with payment, represented 5.61% of the total.
Falls mitigation programs are essential but cannot just be policies in a binder, said John Atkinson, Marsh’s Senior Living & LTC Industry Practice leader. The programs should involve all stakeholders within the community, including families, he said. Atkinson also said that operator policies should be in place to ensure ongoing compliance with existing processes, but providers also should conduct reviews to identify any opportunities for changes.
The most important way to drive down claim loss, Atkinson said, is to not have the claim.
“In a setting where the industry’s mission is to ensure quality of life and promote resident dignity, falls and other incidents will happen even with mitigation measures in place,” he said, adding that providers should have processes in place to ensure family engagement at admission and throughout their loved one’s stay to align expectation on both sides. “Families play an important role in the care partnership, but they need the community to show them how to be engaged.”
Those processes can help create an “open relationship” wherein families come to administrators when concerns arise. Such a relationship also helps to minimize “surprises” that often result in a claim.
Another concerning driver of claims, Atkinson said, is “social inflation” and the effects of juror perception of corporations. Documentation, he said, is critical to help overcome juror distrust. This effort should include documentation related to ongoing assessments, interventions and communications with families throughout a resident’s stay, not just at the time of an incident.
Countrywide findings for senior living owners and operators continue to show an upward trend when it comes to claim metrics — frequency, severity and loss cost, Atkinson said.
“For providers, we continue to see the plaintiff’s bar aggressively bringing claims in this industry,” he said. “It’s important that you understand these leading causes of loss drivers and how to implement successful tools to mitigate.”
The average severity cost of a claim countrywide for senior living providers is forecasted to increase 2.1% this year to $216,700, with a 3.5% rise in loss rate to $790 per unit. General and professional liability claim frequency is expected to increase 1.4%.
The projected senior living loss rate for 2023 is highest in memory care, where it is more than twice the rate of assisted living. Independent living had the lowest projected senior living loss rate for 2023 of all of the senior living types examined.
“Legislators and policymakers need to take notice of these concerning trends,” Atkinson said. “As we continue to see these claim trends increase, it will result in driving up ultimate costs not just for providers, but for residents, families and future consumers.”
Actuaries from the two firms analyzed almost 11,000 closed claims from the past decade from 50 senior living and skilled nursing providers — 33% of participants represent assisted living; 22%, independent living; 8%, memory care; and 37%, skilled nursing.
Atkinson called the report “groundbreaking” and said it is the first report to separate senior living from skilled nursing, providing separate loss costs for each, along with a state focus on hot button states.
