Owners and operators of senior living and care facilities and communities are expected to see some deceleration in rate increases for liability coverage, according to a recent survey from Willis Towers Watson. At the same time, however, don’t expect to see rates decline.
As the McKnight’s Business Daily previously reported, increases in property and professional liability insurance costs are major contributors to runaway operating expenses for long-term care providers. Additionally, skilled nursing and senior living liability losses have accelerated in both frequency and total cost since 2016, with per-incident costs increasing nearly 12% per-year in that time.
According to the current survey, “Headwinds caused by economic and social inflationary pressures will continue to adversely influence loss and insurance costs.”
Many policies now include broad communicable-disease exclusions rather than simply excluding COVID-19. “Stand-alone communicable disease liability policies are available, but large capacity is still not available,” the report noted.
Some insurers are wary of covering senior living and care providers, due to continued labor challenges, they authors said, adding that the insurers are concerned about reduced staffing contributing to loss severity through lack of proper monitoring of residents and witnessing falls.
“Clients seeking to differentiate their risks must focus on incident reporting, claim mitigation, policies and procedures. Emphasis on the clinical program management will also have a positive impact, particularly for those with a focus on fall management, elopement, medical management, and infection prevention and control,” according to Willis Towers Watson.
To increase liability protection, many owners and operators are assuming higher deductibles, the experts said.
“The medical malpractice market continues to experience challenges driven by systemic risks, such as rolling back of tort reforms in key states (California, New York, Pennsylvania) and increasing severity of claims,” Willis Towers Watson noted in a separate report. In addition to inflationary pressures, malpractice insurance is being affected by antitrust and class action claims as well.
Mergers and acquisitions activity in senior living and care slowed in 2022, the authors noted.
Some insurers question the effect that mergers and acquisitions will have on the quality of resident and patient care, whether combining facilities could exacerbate workforce shortages and whether pre-acquisition due diligence provides enough accurate data to adequately underwrite the risks.
