While many senior living communities’ disaster preparedness protocols were put to the test in Florida in the wake of Hurricane Irma, operators in the region—as well as those in Texas recovering from Hurricane Harvey—are now beginning the recovery process, and one of the first steps is to assess damage and file insurance claims.
Senior Housing News spoke with John Atkinson, managing partner with risk management, insurance brokerage and advisory firm Willis Towers Watson, on the types of coverage senior living operators should consider having in their insurance policy to be prepared for natural disasters like the two hurricanes that just struck, and how the recovery process works from an insurance standpoint.
The Chicago-based firm consults with operators and owners of more than 2,000 senior living communities across the country, with a concentration in the Gulf Coast, according to Atkinson. Though recovery efforts are only in the beginning stages in the aftermath of Hurricane Irma, he said that at least a dozen clients have already sought assistance. Still, there are signs that pay-outs might not be as steep as insurers were projecting as the storm approached.
Types of coverage
For natural disasters like hurricanes, here are generally four types of insurance coverage senior living operators purchase to safeguard their communities from such events, Atkinson said.
The first among them is property insurance, which covers apparent damage to the building or contents within the building. Further, operators might also purchase extra expense and business interruption coverage, which provides a community with necessary funds to continue its operations during a period of restoration and thereafter until the business has fully recovered.
In preparing for a natural disaster, operators may evacuate, for which evacuation expense coverage proves to be a worthy investment. This covers expenses relating to evacuation procedures—including expenses related to transportation and temporary housing options, like hotels.
Normal liability insurance coverage, like professional and general liability coverage, is also important. This provides coverage from claims arising out of injuries to residents due to an operator’s negligence, for example during the evacuation process.
These types of coverage can be applied to different types of senior care communities, according to Atkinson.
“Typically, if you’re an assisted living community, an independent living community, a skilled nursing community or a CCRC that has all three care venues in one campus, they’re all going to need those same kinds of coverage,” he said.
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Atkinson and his team help clients with disaster preparedness and training, and in the wake of an impending natural disaster, like a hurricane, will often help map out the storm as it approaches.
In the aftermath, insurance brokers will assist their operator clients in various aspects throughout the recovery process—from reporting claims to ensuring that claims are paid out properly by insurance providers.
“We obviously have to follow the direction of local authorities in terms of when [insurance carriers] can [assess] the locations. But the insurance carriers, the claims adjusters [they] have people in the field [and they are] positioned to be able to be dispatched to customer locations so that they could do these initial assessments. We help our clients with the immediate needs of beginning the restoration process,” said Atkinson.
Each policy is different and allows for a “reasonable period of time” for operators to file a claim, he added.
Too early to call
Given the path of Hurricane Irma, and the fact that major commercial centers in Miami did not suffer a direct hit, insured loss estimates are coming in “far lower” than originally forecast, according to an issued statement from Gary Marchitello, head of property broking at Willis Towers Watson.
“We expect [Hurricane Irma] to result in significant business interruption losses stemming from extensive power outages. These business interruption claims could take months to calculate,” said Marchitello. “Even if a specific property is not damaged, the insured’s property may face other obstacles to its operations, for example it could be impaired by civil authority and, or it may not have a means of ingress/egress due to nearby road closures.”
Overall, Atkinson says it’s too early to predict the overall damages that Harvey and Irma have incurred for businesses. Despite this, he explained that natural disasters like this can have a great impact on the overall market.
“We have a significant number of insurance renewals that happen at the end of the year and these two events may have some impact on the pricing and availability of coverages,” he said. “So, the insured loss estimates are coming in lower than originally forecast [but] there’s going to be a lot of claims and there’s going to be underwriters looking at their books of business and determining whether or not they need to reprice things in order to be profitable so it could have some impact on pricing but it could be too early to tell at the moment.”
Written by Carlo Calma