Commercial liability insurance rates for the senior living and long-term care industries could increase as much as 30% or more in 2019, and that could spell financial headaches for some providers going forward.
That’s according to a new report from risk management, insurance brokerage and advisory company Willis Towers Watson. The report, titled “2019 Insurance Marketplace Realities,” outlines trends and market conditions across all business lines in the U.S. property and casualties (P&C) market, including senior living and long-term care. Specifically, the report projects increases of 5% to 30% across the U.S. for those providers.
The states seeing sizable rate increases are California, Illinois and Florida. In short, the expected increase has much to do with the rising frequency and severity of claims involving senior living or skilled nursing providers, according to John Atkinson, managing director for Willis Towers Watson.
“Senior living providers and skilled nursing operators will be transferring risk to an insurance carrier, and potentially retaining some of that risk,” Atkinson told Senior Housing News. “Either way, they’ll be paying more in premiums in coverage or incurring more deductible or self-insured retention cost.”
Resident falls account for around 40% of those claims, of which about half result in a resident’s death, according to a 2018 report from Chicago-based commercial property and casualty insurance company CNA.
There are also other factors adding to the sector’s overall risk for insurance carriers, such as class-action lawsuits, expanded litigation and natural disasters.
Though skilled nursing providers typically have residents who are sicker or frailer than those in assisted living settings, there is evidence that assisted living and memory care communities see higher average severity losses than skilled nursing facilities. While it’s unclear as to exactly why, one reason could be that there are fewer regulations governing fall-prevention efforts in assisted living communities in some states.
“It’s a disturbing trend, because we’re going to see more and more people in assisted living environments as the baby boomer generation hits 80,” he said.
Moving forward, more insurance carriers will focus on efforts like the management of falls, memory care and prescription drugs, according to the report. And senior living providers would be wise to do the same, in addition to watching other drivers of quality, such as staff turnover.
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[Providers with] high turnover tend to have more claims, and they tend to be more severe,” Atkinson said. “Turnover drives quality. It’s directly proportional.”
Written by Tim Regan