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Senior Living 2021 Claims Benchmarking Study

A General and Professional Liability Actuarial Analysis

Claims
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November 19, 2021

This survey of senior living owners’ and operators’ general and professional liability claim costs reveals an industry facing significant increases in loss costs.

We are pleased to present the inaugural Senior Living 2021 Claims Benchmarking Study: A General and Professional Liability Actuarial Analysis completed by Willis Towers Watson’s Senior Living Center of Excellence. We have conducted a survey of senior living owners’ and operators’ general and professional liability claim costs that reveals an industry facing significant increases in loss costs.

This survey includes more than 14,000 claims that occurred since 2009. The data sample, which spans nearly every U.S. state, closed at the end of 2019, just before the COVID-19 pandemic swept the U.S. and negatively impacted the sector in numerous ways. Understandably, pandemic-related issues jumped straight to the top of the agenda of senior management. However, as the crisis recedes, the longer-term structural issues presented in this report will return to challenge those defining corporate strategy.

Our brokers corroborate the findings of this report: the insurance industry is going through a “hard” market cycle: driven by a noticeable increase in the size of awards — and with an increasing frequency of very large awards reverberating around the industry — premiums are rising, coverage is tightening (policies have more exclusions), and we have seen some insurers leave the industry, with others placing moratoriums on writing new business, resulting in decreased underwriting capacity.

Rising insurance costs and decreased underwriting capacity have been a challenge to all operators. In response we have seen a large increase in retention levels of risks (for example, with deductibles for claims rising tenfold to $250,000 per claim or even much higher in some cases) and more pro-active engagement with insurers around improved internal controls.

However, there are some grounds for optimism. Not only has risk-retention and better internal management of risk improved claim performance in some cases, we are also seeing signs of the insurance cycle turning: some insurers are entering (or re-entering) the industry.

Though new entrants are being cautious and are, to date, participating in a limited way, we are confident that the dynamics that favour insurers as the market softens should become apparent in the coming years.

Please download the report for the full findings.

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