Senior Living owners and operators have seen—and will likely continue to see—growing liability costs as the COVID-19 pandemic persists, a new survey from Willis Towers Watson shows. The study aimed to estimate loss costs, defined as loss cost per unit of exposure, over a 10-year period to measure how the frequency and severity of claims brought against long-term care (LTC) facilities’ owners and operators has changed over time.
The survey included 38 senior living owners and operators. Those owners and operators reported more than 14,000 claims and almost $2 billion in incurred losses from 2009 to 2019. The survey also found that the number of claims against LTC operators for more than $1 million rose over the course of the 10-year period. Similarly, the average cost of claims is higher since 2016 than from 2009 to 2016. Prior to 2016, the value of an average claim rose by 4% annually. Between 2016 and 2019, claim value grew at a rate of 11.56% per year. States with tort reform generally saw less severe claims, and thus lower loss costs, whereas states without senior living tort reform generally saw higher, increasing costs.
Overall, resident falls were the most frequent claims in the survey, accounting for about one-third (34%) of total losses between 2014 and 2018, an increase of 8% from 2009 to 2013. Claims involving choking ($250,000 per claim) and elopement ($260,000 per claim) comprised the most expensive claims on average, though these were also the least frequent claims brought against owners and operators of senior living facilities, with 0.05 and 0.04 claims brought per 1,000 exposures, respectively.
Though claims became more expensive year over year since 2016, the frequency with which claims were brought against LTC owners and operators held stable at 3.75 claims per 1,000 exposures through 2019. But the authors predict that even if state and federal COVID-19 liability protections prevent a wave of direct pandemic-related claims, there will likely be a prospective increase “in related claims, such as claims that either arose during, or were aggravated by conditions caused by, the pandemic.”
LTC facilities have also had to endure “on, average, an eight percent reduction in occupancy throughout the country,” which has meant that, despite higher costs and relatively greater risks of liability, operators have been “unable to respond with higher rates and have even had to offer concessions to residents.” The report concluded that if the LTC industry does indeed see a prospective rise in pandemic related claims, it will have to absorb a “huge cost increase.”
Download the full study from Willis Towers Watson.