Many long-term care and senior living operators are likely facing steep insurance premium jumps for 2024, with underwriters increasingly skittish about extending coverage to poorly positioned clients.
That’s the prediction from global insurance company Willis Towers Watson in its new 2024 Insurance Marketplace Realities report for the US aging services sector.
WTW analysts predicted property renewals would be most concerning for owners and operators, especially those in catastrophe-prone areas or those facing challenging occupancy levels. Those providers could see property insurance bills for their facilities climb by 20% to 50%, versus a more typical 5% to 20% increase for providers with higher occupancy and less risk of severe weather events.
The report placed much of the blame on 2022’s Hurricane Ian and winter storm Elliott, which “significantly affected many senior living owners and operators.”
“Add to this continued freeze, historic rain, severe convective storms and wildfire losses have driven up insurers’ loss ratios adversely impacting profitability,” WTW noted. Those increased exposures have led to the toughest reinsurance market in 30 years, the report said, which means insurers are charging more to take on their peers’ risk.
All of that leads to steeper prices for customers in long-term care, who have been increasing deductibles and purchasing policies with lower limits to cope.
Regarding other insurance types, WTW said its professionals were seeing more aggressive rate increases for professional and general liability as compared to 2022 and early 2023.
“Risks with developed losses and difficult venues will continue to see greater rate increases,” report authors wrote, noting litigation-friendly venues such as California, Florida, New Jersey and New York could be places where it may be hard to find coverage.
WTW also underscored that rates are being influenced by staffing shortages, especially those contributing to loss severity as a result of court rulings that allege a failure to monitor patients. The use of contracted employees also continues to be scrutinized, the firm said.
The report did offer one positive note: Even amid inflation that has driven insurance prices higher across industries and most product types, providers should be able to find plenty of workers’ compensation options with “stable pricing.” The company said 2024 rates were expected to range between 5% lower and 2% higher than 2023 rates.
