The global COVID-19 pandemic has forced seniors and nursing home owners and operators to manage health, financial and operational risks on a scale the industry has never experienced before. I was pressed.
And while the industry remains vigilant about pandemic risks, Michael Pokora, Senior Living & LTC Industry Practice Leader at Marsh, said three emerging risks are also under close scrutiny from owners and operators. Emphasize that you deserve it. they are:
- climate change
- cyber threat
- new lawsuit
climate change
Climate change is the greatest emerging risk for senior living and long-term care owners and operators, as it has both immediate financial costs and long-term operational implications. Rising premium rates in the property and casualty insurance market may be directly related to the increasing frequency and severity of climate change-related events.
“We have just released Q3 data that shows property prices have risen for 20 consecutive quarters and rose another 8% in Q3,” said Pokora. “One of the main drivers of the rise in senior care rates over the last 20 quarters has been climate-related issues: wildfires, floods, and hurricanes,” he said.
“Real estate valuations have risen and supply chain issues have also become a major focus for insurers. The inflationary environment and labor shortages have had a significant impact on the value of adjusted property-related claims. Construction Rising costs are expected to continue through 2023, which could continue to push property valuations higher, prompting insurers to demand higher premiums and increase deductibles for catastrophic events. ”
Mitigating the risks of climate change starts with preparedness. Pokora points out that storm preparedness and evacuation procedures in nursing homes and nursing homes have improved significantly over the past five years.
The most popular areas for retiree and senior housing facilities are also the areas most prone to natural disasters. Owners and operators need to rethink how facilities are constructed and how to make them more resilient.
“I don’t think it’s going to change where older people spend their golden years. It tends to be warmer areas where the fire burns and the wind blows,” Pokora says. “When you start thinking about resilience with respect to some of these natural disasters, you have to challenge yourself not only from a risk management perspective, but also from a training and construction perspective.”
cyber threat
Senior living communities often contain exactly what cybercriminals are after. This includes personal data, financial transactions, medical data, contact information for residents, staff and family members. Not only is there a wealth of data for hackers, nursing homes are increasingly relying on digital records to manage medications, track falls, and serve customers.
Overall, there has been a 23% increase in ransomware attacks against businesses since 2020, Pokora said.
“The average demand in 2018 was about $976,000, of which very little was paid,” says Pokora. “Taking back to 2021, cyber demand averaged $11.9 million with $8.3 million paid.”
This increase in the frequency and severity of ransomware attacks has significantly increased cyber insurance premiums. Last year, policy renewals faced premium increases of over 100%. This year, these updates have increased by an average of 60%.
“The problem we have here is the recession in the insurance market,” says Pokora. “There are now fewer carriers writing cyber coverage, and those writing coverage are reducing the limits they put out there, and they are also significantly increasing premiums.”
New litigation trends
The increasing frequency and severity of claims against senior living and long-term care owners and operators are driving up the total cost of risk for these companies.
- Increased billing costs: Currently, the cost of claims in assisted living settings exceeds the cost of claims in skilled care facilities. According to a recent study by CNA, the average assisted living claim in 2021 will be $267,174, which is 9% higher than skilled care home claims. Marsh is in the process of developing a deeper dive into billing trends that will be available in early 2023.
- Increase in COVID claims: About 500 lawsuits are currently pending against medical facilities, 75-80% of which are against facilities that provide geriatric-related care. This is almost double the amount from the previous year.
“What’s interesting is that plaintiffs’ attorneys are getting creative with how they defend these cases,” Pokora said. “Insurers, for example, are opening up COVID protections in their general and professional liability. It claims to be the result of other incidents or events covered by our policy, which is an area we are currently monitoring very closely as we are starting to run into the statute of limitations for filing COVID-related claims. .”
Despite these factors, rates for general and professional liability insurance for senior living and long-term care owners and operators have remained relatively flat or, in some cases, declined. However, many shipowners and operators have increased deductibles and are taking on more risk to keep premiums from rising. Pokora said these companies should work closely with their risk advisors to ensure they have appropriate policies and procedures in place to manage this retained risk.
Outlook for 2023
Elderly and long-term care owners and operators looking to manage risk and insurance costs in 2023 will need to continue to pay attention to risk management discipline and litigation management, Pokora notes. .
“The real estate market can be very disruptive and polarizing for people with assets in CAT-exposed areas,” he says. “There will be a flight to quality for insurers and it will be important for clients to differentiate themselves from underwriters. recommend to.
“There are alternative risk funding structures that allow for more retained risk to offset these anticipated premium increases. We are entering a market where all options must be considered in order to find
This article is sponsored by Marsh. For more information on how Marsh can help with his 2023 risk management efforts, visit Visit Marsh.com.
