Liability Insurance Rates and Reduced Capacity Add Pressure to the Cost of Long-Term Care Services

The cost of long-term care services continued to rise during the pandemic, and many care providers expect their clients’ costs to increase significantly in 2021.1  A new Willis Towers Watson Insurance Marketplace Realities 2021 Spring Update (“Spring Update”) concludes that 2021 will continue to squeeze long-term and senior care providers from both sides—with general and professional liability insurance rates predicted to increase by 30% or more, and a persistence of 2020’s overall reduced liability capacities in the market for the long-term care provider sector.

2020 brought many changes to the long-term care provider marketplace, notably, the impacts of the pandemic, leading to an exodus by many professional and general liability insurance carriers out of the senior living and long-term care sector. As these changes continue to have a foothold on the industry, the Spring Update highlights that liability coverage retrenchment is a continued issue, with “class action exclusions, punitive damages exclusions and reduction in sublimits” being required by most carriers, along with the addition of exclusions related to “communicable diseases or pandemics.” Among other longstanding concerns, the Spring Update cautions that one of the top concerns is the lack of insurer interest in entering or re-entering the long-term and senior care sector.

Further, for those liability insurers that will consider senior care risks, they are “underwriting conservatively, targeting risks with good loss experience in less troubled venues.” The Spring Update suggests that the following are now generally accepted by providers:

  • Liability insurers are requesting updated COVID-19 data including numbers of positive cases for residents, numbers of positive cases for associates, overall positivity rates, etc.
  • Liability insurers are closely monitoring their COVID-19 incidents and claim notices. Most carriers have received thousands of notices but only a small number of asserted claims leaving much uncertainty about COVID-19-related claim development.
  • Renewal timelines continue to be longer than usual due to substantially increased submission flow, less underwriting authority at the desk level and the ongoing complexities of the pandemic.

Even as the reduction in senior care professional and general liability capacity subsides, the Spring Update reports that “premium rates, program structures, and terms and conditions continue to be impacted.” Ultimately, providers are likely to pass some or all of their increased costs along to the consumer, which may increase coverage costs for LTCi carriers.

Read the full Willis Towers Watson Spring Update.

[1] Genworth, Drivers of the Cost of Care (November 2020), available at

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