Senior Living Industry Grows as the Insurance Market Shrinks

Senior Living Industry Grows as the Insurance Market Shrinks

A recent article by Insurance Journal highlights the massive changes occurring in the senior living industry. The senior population continues to grow rapidly. Currently, there are 6 million Americans over the age of 80. By 2040, there is expected to be 12 million Americans over the age of 80. With the growing populations comes a growing need for senior living and/or skilled nursing facilities. The increased demands and a challenging insurance market have created many dilemmas for senior living facilities, especially those that are smaller in size.

Market Trends

The insurance market is hardening for this particular industry with premiums and rates on the rise. “Professional Liability and General Liability premiums have risen in the past year or two and there’s no end in sight. Property and Commercial Auto rates are also increasing steadily.” The broader healthcare market is also experiencing increases at a minimum of 12% to 15% regardless of historical loss claims.  Premiums could double or triple for organizations that operate as an assisted living facility. Along with the premium and rate increases are the unpredictable nature of claims. A claim could start at $50,000 and end up ballooning to a $1 million claim. It is important to note that the legal environment is causing the spike in claims, not the quality or level of care that is being offered.

Another major challenge is the consolidation of carriers in the industry, removing competition from the market and allowing prices to soar. The few carriers that remain are restricting coverage, cutting capacity and/or increasing retentions. For example, there are “reductions in limits of sexual abuse coverage.” As carriers leave the market, there are also labor shortages in the industry. The industry then becomes a “target of the plaintiff’s bar.”

Proactively Managing Risks

Senior living facilities should expect rate increases. All lines will continue to increase except workers’ compensation, which is “stable and very competitive.” Even the best accounts with little loss history, jurisdiction and exposure growth will feel the impacts of this trend.

Many senior living facilities are struggling with all of these emerging and dynamic changes. However, there are several items insureds can do to proactively manage these challenges, especially when it comes to renewals.

  1. Risk Management Solutions can be implemented to help minimize and mitigate losses. RCM&D can discuss and provide these advisory services.
  2. Work with your Broker to identify proactive measures to set the organization apart from its competition and be in the best position possible before a renewal.
  3. Utilize Brokers’ Claim Advocacy Services to minimize claim activities as well as help the facility understand and learn from the particular situation.

As the senior living facility industry continues to grow and challenges continue to occur, it is best to speak to a trusted advisor to implement best practices in the hardening market. By implementing a risk management solution, losses will be minimized, ultimately protecting the bottom-line of the facility.

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