Nursing home operators stung by ‘significant’ increase in insurance costs

Many nursing home operators said their property and personal liability insurance premiums increased between June and July — sometimes dramatically.

In fact, professional liability premiums have risen “significantly,” according to 30 percent of nursing care companies that responded to the National Aged Care Investment Center’s (NIC) latest Executive Insights survey.

Lack of competition in the insurance market, Covid concerns and litigation were cited as some of the main reasons. The increased frequency of natural disasters, along with a rise in the frequency and severity of claims across the country are other links to the insurance spikes, according to the NIC’s summary of findings.

John Atkinson, managing director and head of the national senior living and LTC Industry Group for Marsh, said carriers are also looking with greater scrutiny at how nursing homes are responding to the staffing crisis.

The study found that 50% of all participating post-acute care segments, including nursing homes, saw a slight increase in professional liability insurance; an additional 30% of nursing home respondents said this type of insurance had increased “significantly.”

The findings for property insurance were similar, according to the NIC survey, with 50% of respondents saying their property insurance had increased a little, while a quarter to a third saw a big jump in their property insurance.

Atkinson said there had already been a hardening of the liability insurance market between 2018 and 2019.

When Covid hit, there was a lot of concern about a potential tsunami of Covid-related claims being brought against operators – this concern was even more acute in the nursing home sector, he said.

Some states such as California, New York and Florida have been hot spots for litigation, Atkinson said, leading to larger increases in liability insurance.

While there is still an influx of Covid-related claims, pushing up insurance rates, it is still not to the level people expected, he added.

In terms of future insurance rates, Atkinson expects more capacity and, in turn, more competition to drive rates down.

Respondents to the NIC survey were owners and managers of 50 skilled nursing and geriatric operators, with 67% owning or managing one to 10 properties. About 20% operate 11 to 25 properties, and 13% have 26 or more facilities. More than half of respondents are for-profit providers, 38% are for-profit providers, and 10% manage both.

The NIC Executive Study was launched in March 2020 to provide real-time insights into the impact of the pandemic on post-acute care sectors and to consider the path to recovery.

Since then, NIC researchers have been able to confirm that the rate of displacement is closely related to cases of Covid infection – most recently there was a reduction in the reported acceleration of displacement when facilities were dealing with the highly transmissible BA.4 and BA.5 Sub-Variants between the end in May and July.

For nursing homes specifically, the rate of moves in the past month slowed by 29%. This marks the second wave in a row in which fewer nursing home organizations report an accelerated pace of relocation.

The acuity of moving has also increased for nursing homes, according to 64% of nursing respondents, an increase of two percentage points on the NIC executive survey between April and May.

Surprisingly, according to the NIC survey, staff shortages are not a driving factor in the overall slowdown in the pace of relocation. In the previous survey, conducted in June, 16 percent of respondents said labor shortages were causing a drop in relocation rates.

Instead, 76% of respondents in the latest survey said the slowdown was due to delayed conversions and sales. About 18% said the delayed move was related to organization-imposed admissions bans, and 6% said residents’ or family members’ concerns contributed to the delayed move.

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