The insurance market for senior care and housing facilities has emerged from the volatile period of the pandemic and is again responsive and competitive. Premiums that were going up considerably are moderating in some subclasses and carriers that pulled away are returning and competing with new entrants.
At the same time, the sector is witnessing a technology explosion that promises to address some of the most difficult claims scenarios.
“I think during the pandemic things got shook up. I believe we’ve seen a lot of things leveling off,” Jason Zuccari at Hamilton Insurance Agency in Fairfax, Virginia, told Insurance Journal. Hamilton specializes in insurance and risk management for the senior community. Zuccari, vice president of business development, calls Hamilton a “one-stop shop for insurance in a senior care community.”
“Obviously, during the beginning and in the height of the pandemic, we saw a lot of carriers reining back, being a lot more conservative, or just not writing anything at all. But as things have been loosening up, the carriers have gotten back to business as usual,” he said “There’s still a few carriers that don’t write in a senior space anymore, but then others that have been out for years are getting back in.”
Hamilton handles both skilled nursing home and assisted living risks, which Zuccari stresses are very different risks and some carriers will only write one or the other. Skilled nursing cares for patients in facilities; assisted living and senior housing are communities with residents. But when it comes to liability, he feels the two sectors are becoming more alike. “The big thing was that assisted living would say, ‘No, we’re not a nursing home.’ But now assisted living facilities are also facing high liability risks and having to learn how to manage them.” He thinks the “liability piece” is the one of the most pressing concerns for all senior care operators.
Research on the most common senior market professional liability claims (Aging Services Claims Report) by CNA, a leading senior care insurer, shows resident falls and pressure injuries continue to make up about two-thirds of all claims. Other top causes are improper care, failure to monitor, delay in seeking care, resident abuse, and medication errors. Elopement claims are only 1.8% but are the costliest per claim, averaging $360,840.
The “liability piece” is the bailiwick of James McNitt, healthcare practices leader with specialty broker Risk Placement Services (RPS) in its Chicago-area office. In a recent report, McNitt noted that since summer 2021, many medical professional liability insurers have “made an abrupt change in direction” in underwriting long-term care facilities. After several years of rate increases from 12% to 15%, many long-term care facility premiums are now flat on renewal, although other senior facilities continue to see rate increases. Some MPL insurers are even offering two-year rate guarantees to long-term care facilities, according to RPS.
“So, whereas there’s a need for rate on certain facilities and groups of facilities, we are seeing competition from new market entrants that is keeping that increase down,” McNitt told Insurance Journal. “We had quite a bit of flat renewals and competitive carriers coming in trying to underprice business. There’s a little bit of what I like to call ‘FOMO’ still in existence here — the fear of missing out where carriers are still trying to compete on accounts that, in my opinion, are ones that should not be competed on.”
McNitt describes it as an “opportunistic” market where some established carriers are letting accounts walk rather than underprice them and the new entries are typically professionals with experience in the market and have a “pretty darn good understanding” of what they’re doing.
“It’s a combination of just new parent companies that are entering the space or carriers that exited in the past and are more satisfied with the rate adequacy of the marketplace today,” he added.
According to RPS, for the first time many insurers are asking policyholders to share more of the risk through deductibles and retentions. This trend, McNitt believes, helps explain what appears to be an overall drop in claims frequency because “the small stuff” is being reported less often.
In another area, sexual misconduct and abuse claims remain a concern and carriers are now limiting and even excluding this coverage in some policies, RPS reports.
Auto is the biggest headache. Insurers are taking a much closer look at hired non-owned auto coverage where employees may use their own vehicles to transport assisted living residents to appointments.
“That’s something that, five years ago, was thrown in for free,” McNitt noted. However, now claims severity is a major concern. “Those total losses have been pretty brutal and in the past 12 to 18 months, we’ve seen carriers really taking a harder look at that.”
He called auto for a senior living facility one of the “most difficult placements in insurance today” because it involves a fragile patient population oftentimes in non-ambulatory situations. There are issues with wheelchair tie downs not being correct and gurneys not being strapped correctly. Also, the non-emergency medical transport industry suffers from driver shortages.
Zuccari agrees that auto is a big challenge, with some states’ liability climates worse than others and driver shortages everywhere. He said carriers are underwriting the individual driver whereas before they’d offer blanket coverage, and they are requiring background checks, which can be irksome in a field with a lot of turnovers. “And it’s gotten expensive. You can understand why — you’re driving elderly people and if you look across the board, just auto in general has gone up.”
One of the coverage issues that McNitt says is still in flux is COVID exclusionary language.
“That is something that we still do see for the majority across the board from all of our carriers. It is some sort of airborne pathogen communicable disease, COVID-specific, exclusionary language. However, some carriers are willing to remove that exclusion for an additional premium,” he noted.
Overall, McNitt assesses the current market as one with some challenges but also one where he’s still “able to get stuff done.” That is a contrast to two years ago in the middle of 2020, when he felt that there were risks that he called “uninsurable” or where the premium was so high that the insured couldn’t afford it. Since 2020, he thinks the market has been “pretty darn consistent.” He uses the terminology of Goldilocks, “not too hot, not too cold” in his outlook.
Risk-reducing technologies that are being introduced at a rapid pace are part of the conversation brokers have with their senior care clients and insurers. These technologies are addressing a number of the most common risks in senior care from inadequate staffing and medication errors to falls and loneliness.
Wearables track a resident’s physical condition, heart rate, stress levels and sleep patterns. Virtual assistants help senior living staffs with day-to-day tasks like reminders for appointments, medications and meals and answer questions for seniors. GPS devices track residents’ location to prevent elopements. Telehealth services provide video consultations, remote patient monitoring and secure messaging. Alexa-like voice activated devices let families and caregivers remotely check in on seniors. Machines accurately dispense medications. Caregivers use data from electronic incident reports to optimize care and safety plans. Telehealth services provide quick access to medical teams.
Hamilton Insurance performs onsite surveys during which a consultant walks the building with the client and notes deficiencies such as a medicine chest on a certain floor being unlocked. Incidents are input into the proprietary risk management system, Servarus, which can issue reports, trends analyses and alerts. Caregivers may be alerted that a patient has fallen multiple times in the past 30 days. “If we don’t figure out a remedy, next time he’s going to go to the hospital,” Zuccari explained. The program also tracks hospital readmissions and lets owners see which of their facilities are having more incidents.
“All of these data points have been able to help reduce claims and falls, and the whole idea is building this culture of awareness. If we see something, we’re going to try to correct it,” Zuccari added.
According to a 2020 claims study by insurer CNA, almost 60% of fall-related claim allegations involve a resident with a prior history of falls and claims where there was a history are more costly.
Both McNitt and Zuccari see the industry’s labor shortage as a major risk factor. It is a challenge not only in caregiving but also in transportation.
“COVID really threw a big curve ball to this industry. I think people are fatigued. I think the stress got to people,” Zuccari said. “Workers and laborers are leaving the industry completely; it’s the stress, the intensity, and the responsibility is hard.”
Skilled nursing facilities are graded on a staffing metric. Facilities that have more medical professionals on staff are presumed to have less adverse medical outcomes. Technology may be able to help here, too. “During COVID, there were facilities that had basically the equivalent of a robotic cat or dog-looking creature that would bring meals to residents. It had artificial intelligence to understand where it was going through the facility and also had the ability for somebody on the other end of it to do the communications. That was a way to bring both a smile and a meal to a fragile patient population, especially during the height of COVID,” McNitt said.
Telemedicine took off during the pandemic and remains popular for both diagnosis and screening to determine if an office visit is needed. Among the benefits of telehealth services are its communication capabilities that counter social isolation and loneliness, which are associated with about a 30% increased risk of heart attack or stroke, according to the American Heart Association.
“The loneliness metric was something that was pretty darn stark during COVID,” McNitt recalled. “We saw the ability to bring in a machine that would not just communicate back and forth with them, play music, show a video, et cetera, but also communicate with their family when visitors weren’t allowed. It seemed simple, but it enabled a happier lifestyle for some of these more fragile patients.”
Better communication leads to happier outcomes. “They’re going to live longer and probably feel better throughout the process and a lot of claims that we do see are a result of just being a disgruntled patient,” the RPS broker said.
As much good as technologies are doing, there are downsides. The main one is that they raise cybersecurity risks and insurance costs. Cyber insurance has “gotten super, super expensive,” said Zuccari, while stressing how important it is for an industry that is dealing with HIPAA compliance and people’s medical records.
Telehealth services can raise issues around remote diagnoses and treatment, confusion about where a claim can be brought, licensing of doctors, or missed instructions due to service interruptions.
McNitt is worried that insurance coverages may be lagging behind healthcare’s digital transformation. Neither MPL nor cyber coverage addresses bodily injury related to a technology glitch, system outage or cyber attack. Wearable technology failures and privacy issues could soon be litigated under MPL, RPS warns.
Zuccari has noticed considerable money going in healthcare technology and a believes a “lot of really fascinating companies” are on the way. He wonders which firms and technologies will win the race to set the industry standard. “Is it wearable? Is it sensor? Is it infrared?” he queried.
RPS points out in its report that solving one problem often leads to creating a new one.
“That’s insurance, right? Nowhere to hide,” commented McNitt.