Because the cost of a data breach can have a grievous impact on a senior living provider’s ability to stay in business, protecting against these cyber threats is one of the top concerns among owners and investors, a new report says.
Like other health care organizations, senior living is not immune to the threat of hackers getting hold of sensitive data. As a result of being prone to such losses, senior living providers across the board have become more cautious in their insurance coverage options to minimize their risks in the event of a data breach, according to a report from Professional Risk Solutions (PRS).
“Recent economic conditions have challenged some communities to operate with a great deal more attention to their risk exposure,” said De’Andre Salter, founder and CEO of PRS. “They have become more fragile as revenues have dwindled and investment capital evaporates, which is perhaps the primary reason for the increase in bankruptcy filings.”
The 2015 Management Liability Purchasing Trends for Senior Living Communities, conducted by PRS, compiled insurance-related data from 353 communities nationwide.
Providers responding to the survey, which included assisted living facilities, skilled nursing, continuing care retirement communities, nursing services and home health agencies, posted total combined assets of $7.8 billion, with 90% of them classified as non-profits.
More than half (56%) of the insured organizations in the report purchased a policy limit of $1 million for data breach/cyber coverage, whereas 26% purchased the least at $500,000.
Meanwhile, smaller shares of providers purchased substantially more for data breach protection, with 6% of organizations purchasing $2 million limits; 3% purchasing $3 million and 2% buying more than $5 million.
The average paid data breach/cyber claim was $107,000, while the highest claim paid was $425,000.
This growing importance of coverage signals a shift among providers’ overall operational focus from cost reduction to risk protection, suggests PRS.
“In this environment, the burden and cost of defending lawsuits and data breaches could easily become the final catalyst for bankruptcy of the organization,” said Salter.
Written by Jason Oliva