Professional liability and property insurance are top of mind for senior living operators, who are experiencing a challenging market driven by high staff turnover, inflation and heighted operating costs.

The cost of labor and staffing shortages are the primary drivers impacting senior care and housing facilities, insurance experts specializing in senior living say.

“Turnover has been a historic issue and it’s not going to go away,” said David Thurber, senior vice president, legal for CAC Specialty’s senior living practice group.

Ninety-two percent of nursing homes and nearly 70% of assisted living homes reported significant or severe workforce shortage in a March 2023 poll by LeadingAge. Nearly two-thirds of respondents said their workforce has not improved since June 2022.

Caring for seniors can be a mentally and physically taxing job, leading to burnout. Workers who might have stayed in senior living in the past can go work in other industries with better pay.

High staff turnover becomes a challenge for the insurance industry because it generally correlates with things that give rise to loss, said Blaine Thomas, vice president and industry leader for aging services at CNA, an insurer that specializes in senior living. “You’re training new people who are unfamiliar with the facility, they’re unfamiliar with the residents, they’re unfamiliar with the policies and procedures of the organization,” he said. “All of these things are also taxing the rest of the staff that are helping onboard, mentor and train these individuals. And so, it takes away from some of the care delivery and creates an opportunity for a failure to occur.”

When failures do occur, they can lead to professional liability claims averaging approximately $250,000 according to CNA’s Aging Services Claims Report.

The report found that a lack of appropriate staffing may contribute to or exacerbate allegations of failure to monitor — and may lead to an increase in unwitnessed falls or delayed identification of pressure injuries. Resident falls and pressure injuries make up approximately two-thirds of all claims.

The average liability claim for an assisted living bed now exceeds the average liability claim for a skilled nursing bed, which suggests possible further turbulence in the professional liability market for assisted living in particular, said Lorraine Lewis, an executive vice president at Alliant Insurance Services.

Overall, professional liability capacity has opened back up for senior living facilities after contracting during the pandemic. After significant rate increases during the period of 2019-2022, rates are now beginning to stabilize for operators with positive loss experience in favorable litigation venues.

“We’re still seeing modest rate increases, but they are not nearly as extravagant as what we saw for the past two years,” Lewis said. “We’re in an environment for most operators where rates are stabilized, so they could expect flat to 5% or 10% (on renewals).”

Social Inflation

As more insurers enter the senior living sector, there’s a perception that the industry is rate adequate, a perception that Thomas warns could be shortsighted.

Capacity is depressing some of the rate achievement in the market, and to respond to the true cost of insuring the industry, another firm market lies ahead, Thomas warned.

“I don’t think that the new capacity is entering a marketplace that’s as profitable as they perceive, if they’re using historical trends around rate achievement to time the market,” said Thomas. Whether auto liability, general liability or medical malpractice, all are experiencing trend lines associated with social inflation and the desire to punish the corporation.

The medical malpractice market, in particular, is plagued by social inflation.

“It’s not all about the multimillion-dollar hit,” Thomas said. “It’s about the $150,000 claim a few years ago that might go for $250,000 to $300,000 today.”

Thurber believes the senior living industry is especially susceptible to social inflation because seniors make sympathetic plaintiffs, and juries don’t generally see the industry as doing the best job possible to take care of the elderly. Juries become aware of the staff turnovers and that seniors sometimes go into facilities against their will.

“I think senior care people are seen as victims when it comes to an injury,” Thurber said. “They’re certainly painted that way by plaintiff’s counsel. And so, there’s this emotional need by juries, more now than ever in the past, given how we’ve evolved socially over the last two years, to provide money to residents.”


While rates for professional liability have mostly normalized, property remains a major concern for the industry, with rates increasing as much as 50% or more in some venues.

“We are in a once-in-a-lifetime situation in terms of the difficulty of the property market,” Lewis said. Underwriters view senior living in particular as a high-risk asset class because facilities are built with wood frame construction that are prone to fire and other types of catastrophe damage.

In a May 2023 executive survey published by the National Investment Center for Seniors Housing & Care (NIC), between 86% and 95% of operators across all care segments (independent living, assisted living, memory care, and nursing care) reported an increase in their property insurance coverage compared to one year prior. Approximately one-third of operators reported the cost of property insurance to have increased significantly.

Retirement living tends to be concentrated in areas prone to hurricanes, floods, hailstorms or wildfires. Operators with catastrophe exposed property should see a 20% to 30% rate increase this year, while portfolios in non-catastrophe geographies can expect a rise of 5% to 25%, Lewis said.

Operators in Florida may see anywhere from a 30% to 45% increase or find that coverage is just unavailable.

“A lot of carriers have pulled out of states altogether,” said Mark Holt, senior vice president of risk management at CAC Specialty. “It’s not uncommon if you have a catastrophe-exposed risk, instead of having it all with one carrier, having to layer it up with six, seven, eight, nine carriers. No one carrier wants to be on risk for $20 to 30 million.”

Carriers are turning to higher deductibles and the application of coinsurance to flatten out premium. Percentage deductibles that 10 to 15 years ago used to be 2% to 3% are now up to 5% in some catastrophe-prone regions, Holt said.

Underwriters specializing in senior living facilities also are becoming more insistent that operators evaluate insured value to reflect increased replacement costs due to inflation.

“I think many organizations don’t fully reflect the regulatory changes and the increased cost of materials as they think about what it’s going to cost to replace their buildings going forward,” Thomas said.

One reason for that is operators tend to rely on industry tools that may undershoot the true replacement cost or business interruption value of a facility.

“Labor and material costs are up … 40% since pre-pandemic.” Thomas said. “That, in conjunction with insurance to value (ITV) and business interruption values that were underrepresented, means huge increases in property costs for the senior living operators out there before they can attract more attention to the property insurance space from the market.”