Weigh liability insurance
William C. Fisher
Overall, insurance can be 10% of operating expenses. Liability insurance rates remain very subjective, fluctuate greatly between insurance companies, and have objective components such as number and type of licensed beds.
But due to the lack of consistent claim patterns, actuaries have a difficult time predicting annual loss estimates and corresponding loss ratios. This results in a rating system that experiences greater impact from market swings.
Since January 2004, senior living CFOs have seen premium decreases from 1% to 10% at each renewal, depending on the particular exposure base. Most insurance company executives predict it is only a matter of time before the premiums rise. Take, for example, Wes Van Der Voort, Senior Care specialist at Chicago-based A. J. Gallagher & Co.: “Assuming the economy has bottomed out and barring any unforeseen catastrophes, we anticipate the market slowly stabilizing and returning to more prudent underwriting practices over the course of the next several years.”
As this happens, CFOs and their insurance brokers will need to rely on additional resources to keep rates competitive. A consistent and predictable method of positioning the nonprofit organization will become crucial. This will help avoid the impact of insurance premium increases.
A broker with supporting resources and senior care industry experience will offer greater impact on underwriters determining where to place capacity and aggressive rates. Such a broker will bundle services such as supportive loss control, claims advocacy and knowledge of your clinical make up, policies and procedures. This “bundle” will be presented to the underwriters in a way that makes the organization and its broker stand out as a compelling risk.