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Survey Report

Insurance Marketplace Realities 2022 Spring Update – Senior living and long-term care

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April 7, 2022

Rate increases are stabilizing, and the emergence of new capacity will continue to drive competition.
Rate predictions: Senior living and long-term care
Trend Range
General and professional liability Neutral increase (yellow line, purple triangle pointing up) Flat to +25%
(Higher with adverse loss experience and/or poor venue)
Property
Non-challenged occupancies Increase (Purple triangle pointing up) +2% to +10%
Challened occupancies Increase (Purple triangle pointing up) +15% or more
Workers’ compensation Neutral Decrease Increase (flat yellow line, arrow pointing up and down) -2% to +4%
Auto Increase (Purple triangle pointing up) +5% to +15%

Key takeaway

Rate increases are stabilizing, and the emergence of new capacity will continue to drive competition. Program structures and coverage terms will continue to challenge the industry, and markets will look to capture premiums reflective of exposure increases along with moderate rate increases.

Professional liability and general liability

  • New market entrants should provide much-needed competition for senior living risks, though capacity lost in 2019 and 2020 has not been fully replaced.
  • Expect to see rate hike deceleration as the new entrants try to expand market share. Markets will continue to focus on obtaining rate for increased exposures and to decline or non-renew risks with adverse loss history.
  • Underwriters are incorporating broader communicable-disease exclusions rather than simply excluding COVID-19. Stand-alone communicable disease liability policies are available, but capacity is limited.
  • Insurers are highly selective about the facilities they will write and are particularly reticent to deploy large capacity in such litigious venues as New York, New Jersey, California and Florida.
  • To reduce their total cost of risk, many insureds are assuming larger deductibles or self-insured retentions. Buyers need to be proactive in securing lender waivers when retentions exceed those allowed in standard loan covenants or when captives are utilized without acceptable fronting arrangements.
  • We are seeing a significant uptick in the use of captive programs for primary layers.
  • Renewal timelines continue to be longer than usual due to substantially increased submission flow and less underwriting authority at the desk level.
  • Underwriters are seeking more detailed data and information for the renewal process. In particular, information requests may focus on vaccine protocols, staffing adequacy, virus statistics and potential financial instability for senior living communities, given that most lost revenue during the pandemic. (It was reported in 2021 that 49% of assisted living facilities were losing money.)
  • Clients seeking to differentiate their risks must focus on incident reporting, claim mitigation, policies and procedures. Emphasis on clinical program management will also have a positive impact, particularly with a focus on fall management, elopement, medical management and infection prevention and control.

Property

  • The recent influx of capacity is causing a deceleration of rate increases for non-challenged occupancies. However, challenged occupancies (including senior living) and certain geographic locations continue to see higher increases.
  • Capacity remains constrained for accounts underwriters do not consider technically priced or where engineering visits are required for underwriting.
  • Insurers continue to restrict many coverages previously offered, such as communicable disease and cyber. Additional tightening is occurring on CBI (contingent business interruption), service interruptions, deductibles for convective storms and increased waiting periods.
  • We see continued pressure on the part of carriers to move from manuscript to insurer forms.
  • Valuations are being heavily scrutinized, and submissions require ample data to attract new markets.
  • Due to the array of occupancy classifications that can apply to this sector, it is imperative to use accurate occupancy classifications for modeling.

Workers compensation

  • Six consecutive years of profitable results have allowed rates to level off more quickly in workers comp than in other lines of insurance.
  • Underwriting concerns continue regarding opioids, the aging workforce, regulatory reform and medical bill inflation.
  • Carriers (including incumbents) are taking an in-depth look at insureds’ COVID-19 and infection-control protocols and asking more questions about policies and procedures.

Auto

  • 2020 appears to be the auto liability segment’s best accident year in 10 years due to the limited number of vehicles on the road. However, combined ratios are still over 100 and the volume of vehicles on the road is increasing as the pandemic subsides.
  • 2020’s estimated rate of death spiked 24% despite the reduced number of miles traveled.
  • Distracted driving remains a significant issue, and communities with high numbers of drivers using their own vehicles will find more underwriting scrutiny and higher pricing.
  • Higher occupancy vehicles are also viewed less favorably, and rate increases may be higher if a fleet includes many vans and/or buses.

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).

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Contacts

Healthcare Industry Leader, North America

Randy Stimmell
Senior Vice President, Risk Specialties

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