Claims related to resident falls continue to be the primary driver of insurance losses for senior living providers, but wound-related claims are increasing in the setting, according to a new report.
The 2024 General and Professional Liability Benchmark Report from Oliver Wyman Actuarial Consulting and the Senior Living & Long-Term Care Industry Practice of Marsh is a benchmark analysis of the US general liability and professional liability potential for senior living and skilled nursing providers.
The report, which updates 2020 and 2022 benchmark reports, looked at 10,300 closed claims from almost 50 senior living providers — independent living, assisted living and memory care — as well as skilled nursing providers, with approximately $1.8 billion in paid indemnity and exposure over the past 10 years.
The 2024 forecast for senior living projects a 0.6% increase in claim frequency (the number of claims estimated to close), a 3.8% increase in claim severity (the average size of a claim estimated to close with payment) and a 4.4% increase in loss rates (the cost needed to pay an indemnity or expense).
What’s driving losses
Although it’s not surprising that falls continue to be the primary loss-driver for both senior living and skilled nursing providers, the authors noted concerns about the “significant” number of wound claims against senior living providers.
The report reveals projected senior living claims costs of $207,683 per claim for resident falls for 2024, with 963 claims closed with payment. Skin/wound injuries showed projected per claim costs of $267,179, with 65 claims closed with payment.
The increasing number of wound-related claims in senior living emphasizes the importance of being proactive in identifying and managing wounds in residents who develop or move in with them, according to the report authors. The growing use of home- and community-based services in senior living adds another layer of importance to wound care processes and practices, the authors stated.
Abuse was the second-highest cause of insurance loss for senior living, with 100 claims closed at a projected average of $335,570 per claim. The report authors said that those figures emphasize the importance of having admission processes in place to identify individuals who have pre-existing behaviors or conditions. Having strategies and processes in place to manage resident behaviors and recognize when discharge is appropriate is another important factor for providers to consider, they said.
Looking at projected claim costs for commonly identified causes of loss, the report showed 2024 closed claims for choking averaging $368,508 per claim, claims for abuse averaging $335,570 per claim, skin/wound injury claims averaging $267,179 per claim, and elopement-related claims averaging $245,756 per claim.
The report also addressed COVID-19 claims. Although 95% of pandemic claims now are closed, many continue to be litigated in courts with an “aggressive defense,” since the uncertainty remains around the effects of federal and state liability protections, the authors said.
Major loss claims
The majority of the report focused on indemnity and expense limited to $1 million. But the report also highlighted 319 closed claims that were for more than $1 million; only 16% of those claims related to senior living. For claims of more than $1 million, the total average indemnity and expense cost was $2.183 million for senior living compared with $1.758 million for skilled nursing.
The primary causes of loss for larger claims in senior living were falls (31.4%), abuse (15.7%) and choking (9.8%). The number of large claims filed in 2017 to 2019 were more than twice the number of claims filed in 2014 to 2016. Most large claims (67%) also were from three states: California (33%), Florida (20%) and Arizona (14%).
The report also singled out state trends. California loss rates and severity remained consistently higher than national rates and severity, whereas claims frequency in California has remained consistent over the past 10 years.
Florida loss rates also were consistently higher than the national rate, and frequency of claims in the Sunshine State is consistently higher than the national rate, resulting in higher overall loss rates.
In recent years, Illinois loss rates have been trending higher than the national rates, according to the report.
