by: Kelly Reed, VAST
Today I am going to share with you a few thoughts about what’s going on in the senior living marketplace. This is an area that we specialize in both regionally and nationally right now. We’re seeing it, not just in insurance but across all businesses, it continues to be sought after as a growth sector. Clearly there’s more properties, more buildings, there’s more baby boomers retiring every day. I believe we’ve hit the peak now of the number of folks retiring, the baby boomer generation. This is an area for many businesses in many industries as a growth sector. The same for insurance clearly holds true. What’s happened here is over the past number of years we are coming out of what we see as one of the longest soft market cycles in the business’s history.
What we mean by the soft market is we mean the price or the rates continuing to come down. And specifically we’re talking today general and professional liability, which is clearly a cost driver and major risk to these organizations. A couple different reasons why I’m just sharing a few thoughts and what’s going on in this cycle.
- The types of carriers. First, we have the traditional carriers that have been here consistently through the various market cycles. A variety of folks understand that business has been here a long time and they’ve seen some of these changes happen.
- We’ve also seen an influx in what we would say would be the super regionals. Oftentimes a commercial carrier who has developed a product or a program, maybe they’ve leveraged talent from another organization. They may have acquired a small book of business and are expanding it geographically throughout the country. So it’s creating some of these new programs, that are very successful. So from some, from some very successful organizations.
- The third is what we would say would be the physician and hospital insurance carriers. Again, these folks are seeing some contraction in their business that are growing their top line. But maybe it’s more challenging because there’s a shrinking group of private practice doctors or smaller hospitals that are available, so they may see growth in this environment for the senior living business that they have some familiar familiarity with and also span that healthcare spectrum already. So I’m seeing that clearly as a growth area. What that brings us when we have new players and new products and new systems, it’s, it’s creating a new value proposition.
New Value Propositions
First area is, risk management. What we’re seeing is that a number of these carriers that have entered the marketplace that have pushed some of that traditional status school and those that have been there and are continuing to evolve their value proposition and quality, that may be a clinical relationship that may be education for staff, that may be bringing on more staff on board that can be more physically onsite or utilizing video or webinar education. But just creating and expanding that risk management platform and availability or access to information for their clients.
From a claims management standpoint. We saw this, the physician hospital environment a number of years ago where this, this tough defense status really took hold. It’s really tough in this space. We understand it, we respect it here. There’s a lot of industry professionals that kind of say, you know, the claims are what they are in this space. What we are seeing though is a number of organizations looking for a stronger defense they want to say we’re not going to be a target of the plaintiff’s bar, if you will. We want to be able to vigorously defend our claims when we didn’t do anything wrong and when it makes sense, we want to reasonably settled that. Just settle a claim to make it go away. So we’re continuing to see some of those dollars shifting the amount or the percentage of indemnity versed that defense cost or ale that’s being paid.
Third is risk financing with new carriers, with new products, with innovation comes new risk financing strategies. So gone are the days of here’s your deductible, your proclaimed or to your indemnity or you’re a aggregate cap. They were st profit sharing products. We’re seeing a million dollar plus clients have guaranteed cost or zero deductible programs. We’re seeing the utilization of captives in smaller environments through group captives are segregated cell as well as large clients in a single parent opportunity. So really spanning that whole spectrum from guaranteed cost of single parent captive. We’re seeing another level of sophistication we gained by clients and the biggest piece of data, um, at the end of the day, data’s came for business right now, whether it’s an insurance company who is going to Medicare.gov to see the nursing home compare score and reports and data or the licensing reports or having better knowledge of specific venues and where the plaintiffs bar may be more challenging or utilizing other organizations, either broker or carrier the claim reports that are coming out.
What the data tells us
Data is significant in those that harness it from an insurance company and underwriting perspective are able to be a very effective. And at the client level you have a phenomenal opportunity. If you understand your risk to make sure that you’re in the correct risk. Financing model can be very special. And I think there’s a lot of opportunity for those that are best in class, who can really embrace and understand where we are right now is we’ve kind of gone through the soft market cycle. We are seeing the rates increase right now, nationally, couple of different reasons. We’ve seen a number of insurance companies exit the market. One personal belief, I do believe in many areas, there’s just insufficient premium being collected for the risk, but also like there’s some things going on to claim wise, especially in the severity side that are creating more challenges for us as well. So we are seeing a claims increase from a severity standpoint. We are seeing rates start to tick up. It’s that time where folks want to start accepting or participating in the risk more at the client level. And it’s also the time to make sure that you’re best practice from a risk and claims management standpoint. So opportunity exists.
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