The best positioned long-term and senior care providers can expect to see liability insurance rates climb by as much as 30% this year, while those with previous losses and poor venues will face even stiffer hikes, according to a marketplace update from Willis Towers Watson.
The international brokerage firm’s spring survey of insurers found rates and plan structures continue to be impacted by both the pandemic and an exodus by many insurers away from the long-term care marketplace.
“The coverage retrenchment trend continues — class action exclusions, punitive damages exclusions and reduction in sublimits are required by most carriers,” Willis Towers Watson reported in the senior living and long-term care segment of its Insurance Marketplace Realities update issued Wednesday. “Additionally, nearly all carriers are attaching COVID-19-related exclusions — typically referring to communicable diseases or pandemics.”
Like liability insurance, property insurance premiums are climbing at above-average rates, with a base increase of 10% to 20%. Facilities with catastrophic losses should expect hikes starting around 40%.
Excess lines, in which providers seek to protect themselves from unusually high claims that exceed their standard liability coverage, are climbing 30% or higher, according to Willis Towers Watson. Long-term care advocates in some states have already reported premium increases far exceeding those averages.
In its report, Willis Towers Watson said one of the major challenges for providers is continued disinterest in the market. Some new insurers are considering taking on senior care risk, especially in “less-troubled” geographic locations, but they haven’t been able to fill the gap created by last year’s market departures.
Making matters worse, site visits required for property underwriting remain limited. That gives incumbents a competitive advantage, and leaves some providers with fewer opportunities to price shop.
Other findings from the firm’s LTC report and its broader look at commercial insurance include:
- Across industries, none of the 31 commercial lines predicted rate decreases. But, in a bit of good news, some increases, such as for workers compensation, are beginning to slow or hold steady.
- Anticipated rate increases for cyber insurance coverage jumped from +10% to +30% in the fall to +25% to +50%.
- Renewal timelines are running longer due to “substantially increased submission flow,” more underwriting oversight and pandemic complexities.
To reduce their total costs, many LTC insurance customers are taking on larger deductibles or moving to self-insurance, but Willis Towers Watson cautioned that such measures may require lender approval.
Another way the firm said providers can drive down rates: Improve COVID-19 outcomes and share the data. Insurers are monitoring vaccine rollout to residents and staff and will seek updated data on inoculation efforts, case counts and deaths, as well as policies that outline infection control efforts. That information will be especially valuable for worker compensation policies, where the number of carriers has fallen.