Nursing Home Insurance

The Impacts of COVID-19 on the Nursing Home Insurance Market

The coronavirus pandemic of 2019/2020 has affected every corner of the globe. Individuals and businesses have suffered under both health-related and economic conditions. The healthcare industry has stepped up to help those in need of medical care, but as with many industries, healthcare remains in flux. No part of the healthcare sector has been affected more strongly than in the nursing home market. COVID-19 has forced powerful changes across this sector, including that of the role of nursing home insurance in covering liabilities created by the virus. The impacts of COVID-19 on the nursing home insurance market will be felt for years to come.

Nursing Homes: Unprecedented Illnesses and Deaths in the Wake of COVID-19

To give the impacts of the nursing home insurance market perspective, it can be valuable to investigate the toll COVID-19 has taken on America’s seniors and caregivers in long-term care facilities. According to a regularly updated database of coronavirus figures published by the New York Times, nursing homes have been hit hard. As of November, 2020, about 38% of all COVID deaths in the United States are linked to nursing homes. This figure includes both residents and employees of long-term care facilities. In all:

  • 87,000 coronavirus deaths have been reported in nursing homes.
  • The coronavirus has infected over 581,000 people in these facilities.
  • 23,000 nursing homes have experienced at least one coronavirus infection or death; in many cases, multiple infections and/or deaths have been reported from single facilities.
  • In 17 states, more than half of all coronavirus deaths are linked to nursing homes.

The Nursing Home Insurance Market

Faced with the staggering statistics above, it is no surprise to learn that nursing home insurance is overwhelmed by the risk exposures posed by COVID-19. The insurance market for long-term care facilities had already been strained before the pandemic; analysts forecasted that claims frequency was on track to rise by 2% annually, and losses were projected to increase by 5%. 

The pandemic turned those projections on their heads. By mid-2020, insurance brokers were reporting loss increases in excess of 15%, even for long-term care facilities with little or no loss histories. Insurance carriers writing policies for this healthcare sector had dwindled in recent years, and the risks associated with COVID-19 forced many carriers to reevaluate their markets. The liabilities many nursing homes and assisted living facilities will face in the coming months only exacerbate the problems within the insurance market. In simple terms, many insurers are growing increasingly wary of providing both capacity and coverage for the long-term healthcare sector.

Factors Leading to Increased Claims Frequency and Losses in Long-Term Healthcare

Insurance industry analysts are quick to point out that increases in claims frequency and losses are not unexpected and may contribute to a hardening of the nursing home insurance market going forward. For the most part, nursing homes have valiantly attempted to protect their residents and staff from infection. However, certain factors are contributing to the increases. These factors include:

  • A lack of proper financial resources to obtain personal protective equipment (PPE) for residents and staff.
  • Difficulties in securing adequate PPE due to consumer demands.
  • Poor or confusing responses at the federal and state levels, particularly in helping nursing homes acquire PPE.
  • Insufficient COVID testing and contact tracing within facilities and the surrounding communities. 

Looking to the Future of the Nursing Home Insurance Market

For now, insurance carriers and insurance professionals are watching the nursing home insurance market carefully. It may be too early to tell how the market will adjust, or if difficulties will continue to plague the sector. Already, some carriers are implementing restrictions on writing business for nursing homes. Others are adding broad exclusions related to COVID-19 or curtailing the writing of new professional liability policies for the healthcare industry at large. 

For nursing homes, many in this sector have banded together to call for limits on liabilities on the national level. Working with the American Healthcare Association and the National Center for Assisted Living are pushing for legislation to help protect the nursing home insurance market from excessive claims and losses. Time will tell whether the market corrects in coming years; legislation can help remove some of the uncertainty about liabilities, encouraging carriers to once again write business for this critical healthcare sector. 

About Caitlin Morgan

Caitlin Morgan specializes in insuring assisted living facilities and nursing homes and can assist you in providing insurance and risk management services for this niche market. Give us a call to learn more about our programs at (877) 226-1027.