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Survey Report

Insurance Marketplace Realities: Health care professional liability, senior living and long-term care

2018 Spring Update on Commercial Insurance in North America

Casualty|Financial, Executive and Professional Risks (FINEX)

April 12, 2018

Underwriters for long-term care and senior living risks are taking a back-to-basics approach as the frequency and severity of claims rise.

Price prediction

  Trend Range
Long-term care and senior living: Up +5% to +20%

Key takeaway

Underwriters for LTC and SL risks are taking a back-to-basics approach, focusing on loss exposure, venue, operational excellence, risk management, claims management acumen, and clinical policies and procedures.

The long-term care (LTC) and senior living (SL) insurance marketplace stands in stark contrast to the marketplace for the health care industry as a whole due, in part, to the rising frequency and severity of claims.

The insurance marketplace for LTC and SL is quickly ging more complicated.

  • Some carriers with significant market share have exited the marketplace due to adverse underwriting performance. Remaining carriers are making rate and deductible/retention changes in an effort to improve profitability. Drawn by the rising rates, new capacity has entered the market and has begun to gain traction.
  • Carriers are restricting capacity in deteriorating venues, such as Cook County, Illinois; California; Florida; Kentucky; Tennessee; and West Virginia. Higher losses in assisted living and memory care are creating a potentially new normal in those sectors.
  • In underwriting, we see increasing emphasis on an LTC operator’s sophistication, experience and risk management protocols. Best-in-class operators have generated discounts in the face of rising rates when they can demonstrate proactive clinical and risk management engagement.

Buyers will need to keep an eye on several external factors, such as auto rates, court activity and rising cyber risk.

  • As most LTC claims activity can be attributed to loading and unloading of residents, this segment is seeing increases in auto rates.
  • Workers’ compensation is stable with ample capacity.
  • The LTC segment, like health care as a whole, is closely watching verdicts, settlements, class action matters and the evolution of tort conditions in various venues.
  • 2017 saw a significant increase in ransomware claims in health care overall and in the LTC space, increasing pressure for insureds to develop integrated cyber solutions.
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