By Jordan Parnell and Gerald Stoll

The insurance market for the senior care sector has moved from one that was hardening, with escalating rates and more limited availability, to one that’s now really hard. It’s forcing operators to get strategic and aggressive to meet the challenge.

Even before the coronavirus pandemic hit, some insurers were imposing moratoriums on new senior care clients. Several exited the market. Professional liability and general liability are the biggest pain points as legal complaints against senior facilities have helped double the number of claims in some sectors and boosted average indemnity payments by 60%. Then there’s the pandemic: 8% of U.S. cases – and more than 41% of total deaths – have occurred in long-term care facilities,.

Senior care operators must become better prepared for their insurance renewals. But circumstances demand that they step up their risk management game to ease the renewal pressures this year and in the future. This is especially so for risks related to COVID-19, as that’s not abating anytime soon. Further, the market’s rife with stories of rates increasing from 20% to 600% from 2019 levels, with some brokers reportedly unable to get quotes at all. So operators should hope their broker’s expertise and relationships are up to the challenge.

Here are some points for operators to consider to help position their organizations for what’s ahead:

  • Get an earlier start on senior care insurance renewals to tell a better story. The earlier you start documenting your track record on losses and how you’ve addressed them over time, the more effectively you make the case for why your risk is different than others in the market. Ideally, you and your broker have been in regular touch about your losses and what’s behind them (and your risk mitigation measures generally). This helps your broker negotiate.
  • Risk management – and especially COVID-19 risk management – counts. It says a lot about a senior care organization if it has a well-documented risk management strategy in place, supported by regular external risk assessments and a claims management strategy where claims are, to the best of your ability, closed out and the history kept comparatively clean. This year, COVID-19-related risk management has also come into play. Insurers are requiring COVID-19 questionnaires, where operators provide specific numbers on COVID-19-related cases, deaths and recoveries along with visitation procedures and preparations for future surges of contagion. (Don’t be surprised, incidentally, to see exclusions for the novel coronavirus, along with other communicable diseases.)
  • Be open to alternative risk measures. In this environment, your broker should be negotiating hard on your behalf with the insurers. You need to ask questions about your best options for moving forward. Access to carriers and distribution networks can vary dramatically among brokerages. Additionally, there are different ways to manage your risk. The more seasoned brokers who know your business specifically and the senior care sector generally will be able to advise you on different strategies and how to put them into place. Like? The captive insurance route could be one option.

The need for a healthy industry providing future homes to the burgeoning population of aging Americans has never been greater. Yet the coronavirus pandemic has not only placed our seniors at risk, but also pushed operators of needed facilities to the edge, too, making this round of renewals a major test.

HUB International’s team of senior care specialists will work with your organization to deliver tailored insurance and risk management solutions.