Long-term care providers will likely see their professional liability and property insurance rates climb again this year, but experts at a global financial services firm predict those cost increases will be tempered by the insurance industry’s own recovery.
Analysts at Willis Towers Watson on Wednesday estimated that general and professional liability premiums might remain flat for some providers who have few or no previous losses and are in non-plaintiff friendly venues. But for those in tougher geographic markets or with a history of expensive claims, rate hikes could still average or even surpass 20%.
Meanwhile, WTW’s Insurance Marketplace Realities 2024 Spring Update predicted that property insurance costs for senior living and long-term care would climb by as much as 10% for non-catastrophic policies.
The projections for both coverage types actually could be seen as good news, when compared to the relative run on rate escalation amid the pandemic. That wave has increased legal concerns for the sector, and more routine and expensive storm damage in the US. Last fall, WTW predicted prices on certain LTC lines of coverage could spike 20% to 50%.
“Continuing frequency of severity [of claims], coupled with overall inflationary pressures on many fronts, is driving rate increases for property, general and professional liability, and auto coverages,” wrote North American healthcare analysts Maryann McGivney and Randy Stimmell.
“In property coverage, which created great angst among owners and operators in 2023,” they added, “there has been some stabilization, albeit a reduction in rate increases, with a slight expansion of capacity.”
That means not only could coverage be more affordable, it also might be easier to get.
Other policies for specific needs, including sexual abuse and class-action coverage, “continues to be difficult, and carriers are restricting coverage terms on existing business,” the WTW authors noted.
One bright spot for now is workers’ compensation. Rates could actually fall by about 5% or increase by as little as 2%, WTW projected.
The higher cost of medical care and rising wages, especially for highly compensated employees, pushed rates up more than expected in 2023. But 2024 “should bring more muted renewal outcomes” as those pressures fall and the Federal Reserve contemplates interest rate reductions, WTW said.
“Workers compensation remains a bright spot compared to other major lines of coverage as insurers continue to turn a profit,” McGivney and Stimmell wrote.
Access to both workers comp and professional liability policies also may be limited in some markets. WTW reported insurance companies are frequently reluctant to deploy significant capacity in litigious venues such as New York, New Jersey, California and Florida. The firm also pointed to Pennsylvania’s revocation of an anti-venue shopping rule in 2023, which could make that state more risky for future policy renewals.
