What Senior Living Facility Owners Need to Know
This blog’s goal is to provide you with insights into the current state of the commercial insurance market. Recent data from Ivans Insurance Services, a respected unit of Applied Systems Inc., reveals significant shifts in premium rates across various insurance lines. We aim to break down these changes, explain their potential impact on your senior living facilities, and offer guidance on how to navigate this evolving landscape.
The Big Picture: Rising Rates Across the Board
The second quarter of this year has witnessed a broad upward trend in commercial insurance rates, with several lines experiencing increases of approximately 10%. This trend affects almost all areas of coverage, with workers’ compensation being the sole exception. Let’s delve into the specifics:
- Commercial Property Insurance: The Steepest Climb
Commercial property rates have seen the most substantial increase, with renewal premium rates jumping to 10.9%, up from 10.5% in the first quarter. For senior living facility owners, this is particularly noteworthy. Your properties, which house vulnerable populations and often include specialized equipment, represent a significant portion of your asset base. This rate hike could translate to higher premiums for protecting your buildings, contents, and business interruption coverage.
It’s worth noting that this data contrasts with a recent report from Marsh LLC, which indicated a slowdown in property rate increases. The discrepancy likely stems from differences in the surveyed companies, with Marsh focusing on its client base while Ivans casts a wider net across multiple agencies.
- Business Owners Policy (BOP): A Comprehensive Coverage Seeing Steady Increases
Business Owners Policy rates increased to 9.5%, up slightly from 9.3% in the previous quarter. For those of you who opt for BOPs to bundle property and liability coverage, this increase could affect your overall insurance costs. While BOPs or packaged program can offer cost-effective solutions for smaller senior living facilities, the rising rates might prompt a reassessment of whether this packaged approach remains the most economical option for your specific needs.
- Umbrella Liability: A Significant Jump
Umbrella liability rates saw a notable increase to 9.6%, up from 6.8% in the first quarter. This jump is particularly relevant for senior living facilities, given the higher-risk nature of your operations. Umbrella policies provide crucial additional coverage beyond your primary liability limits, protecting against potentially catastrophic claims. The substantial rate increase reflects insurers’ growing concerns about large liability claims (Nuclear Verdicts) in the healthcare sector.
- Commercial Auto: Steady Increase Continues
Commercial auto rates rose to 9.3%, a slight uptick from 9.1% in the previous quarter. For senior living facilities operating vehicle fleets for resident transportation or other purposes, this continued increase warrants attention. Factors such as rising repair costs, more frequent severe weather events, and an overall increase in accident severity (bodily injury to residents) are likely driving this trend.
- General/Professional Liability: A Moderation in Rate Increases
While general/progessional liability rates are still rising, the pace has slowed somewhat. The second quarter saw a 4.9% increase, down from 5.9% in the first quarter. This moderation offers a small silver lining, but it’s important to remember that rates are still climbing. For senior living facilities, where slip-and-fall incidents and other liability concerns are ever-present, maintaining robust risk management practices and general/professional liability coverage remains crucial.
- Workers’ Compensation: The Lone Decreaser
In a landscape of rising rates, workers’ compensation stands out as the only line showing a decrease. Rates fell by 1.28%, a slightly steeper decline than the previous quarter’s 0.88% drop. This continued decrease could provide some relief for senior living facilities, where employee safety and health are paramount concerns. However, it’s essential to maintain strong risk management practices to keep claims low and potentially benefit from this downward trend.
Implications for Senior Living Facility Owners
These rate changes have several implications for your insurance strategy:
- Budget Planning: With most lines seeing increases, it’s crucial to factor these higher premiums into your financial planning for the coming year.
- Risk Management: Now more than ever, implementing robust risk management strategies can help mitigate the impact of rising rates. This includes staff training, facility maintenance, and safety protocols.
- Coverage Review: It’s an opportune time to review your current coverage. Are there areas where you might benefit from higher deductibles in exchange for lower premiums? Are there new risks that need addressing?
- Claims History: Your individual claims history will play a significant role in your specific rate changes. Facilities with favorable loss records may see less dramatic increases.
- Market Navigation: With rates rising, it’s important to work closely with your insurance agent to explore all available options. This might include looking at different carriers or considering alternative risk transfer methods like captives for larger organizations.
Conclusion
The commercial insurance landscape is undeniably challenging right now, with rate increases affecting most lines of coverage. However, by staying informed, proactively managing risks, and working closely with your insurance partners, you can navigate these changes effectively.
At Echo Assurance we are here to help you understand these market shifts and find the best solutions for your risk transfer program. Don’t hesitate to reach out if you have questions or would like to discuss your specific insurance needs in light of these market changes.
Remember, while insurance is a necessary expense, it’s also an investment in your facility’s long-term stability and success. By staying ahead of these trends, we can work together to ensure your senior living facility remains protected and financially sound in the face of evolving insurance markets.