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Survey Report

Insurance Marketplace Realities 2020 – Senior living and long term care

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November 13, 2019

Increasing severity, frequency and volatility (higher value verdicts and settlements) are creating continued hardening and rate firming. Some carriers are restricting excess limits, resulting in more multi-carrier tower structures.
Rate predictions
  Trend Range
General and professional liability
Favorable loss experience and venues Increase (Purple triangle pointing up) +10% to +15%
Adverse loss experience and poor venues Increase (Purple triangle pointing up) +30% or more
Auto Increase (Purple triangle pointing up) +15% to +20%
Property
Non-cat exposed Increase (Purple triangle pointing up) +5% to +15%
Cat-exposed without losses Increase (Purple triangle pointing up) +10% to +20%
Cat-exposed with losses Increase (Purple triangle pointing up) +15% to +30%

Key takeaway

Increasing severity, frequency and volatility (higher value verdicts and settlements) are creating continued hardening and rate firming. Some carriers are restricting excess limits, resulting in more multi-carrier tower structures.

The general and professional liability marketplace continues to tighten due to insurers' drive for profitability and emerging loss trends.
  • Carriers are reporting increases in loss frequency and severity of 8%–12% over the course of the previous year.
  • Capacity is contracting and some carriers are leaving the marketplace altogether.
  • Buyers are seeing less favorable terms and conditions.
  • In addition to rate increases, buyers may be subject to step factors — additional charges when a new risk or new asset, for which no historical loss data is available, is involved.
  • Several carriers report that they are adjusting bed rates mid-term (for additional exposures added to a policy between renewals) to keep up with negative claim trends.
  • Retentions (deductible or self-insured retentions) are on the rise.
  • We see competition, however, for insureds with more stable loss experience.
  • A back-to-basics approach requires more detailed submissions, face-to-face meetings with underwriters, thorough supplemental information, clinical and risk analytics and longer lead times to obtain quotations.
  • Underwriters are delving deeper into operators' policies and procedures regarding high-profile risks, including falls, elopement and resident abuse.
  • As some carriers re-underwrite their books, they are hyper-focused on troubled venues where severity and frequency trends are more pronounced.
  • More clients are considering captive solutions and creative ways to drive down the cost of risk while maintaining compliance with lender and stakeholder requirements.
  • Owners are reducing the volatility of their managers' insurance expense by securing insurance on behalf of those operating their assets.
  • Class-action lawsuits focused on anti-consumer, staffing, marketing and ADA violations are prevalent in California but could be coming in more states.
  • Expanded litigation beyond urban areas is affecting results in suburban and exurban venues more dramatically.
  • As the industry struggles with employee retention, the full employment economy in many regions accelerates staff turnover. Turnover disrupts continuity of care, compliance practices, documentation and record keeping. In turn this often leads to increased litigation, inflated defense expenses and higher costs to resolve claims.
  • Natural disasters, including wildfires, catastrophic storms and flooding, are drawing underwriter attention to disaster preparedness.
The auto market continues to worsen.
  • Fewer insurers are offering monoline auto options as this line of business continues to face profitability issues.
  • Brokers are having to become more creative in finding package solutions, e.g., packaging auto with workers compensation or other lines of coverage.
  • Claim severity resulting from loading and unloading residents and distracted drivers is a major concern for underwriters.
Several factors are creating a hardening property market.
  • Property market conditions continue to see an acceleration in rate increases as two years of combined ratios exceeding 100% have forced underwriters to push for profitability.
  • Capacity is shrinking, especially in catastrophe-prone areas.
  • Attritional losses are driving higher retentions, which can also be a factor in minimizing rate impact, as carriers may push higher retentions as a strategy for keeping rate increases at bay.
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