The evolution of climate change, ongoing macroeconomic variations and the fact that an aging population will increasingly need long-term care options will require optimal risk management in the nursing home sector.
A number of factors are converging to make the art and science of nursing home industry underwriting increasingly difficult. This does not mean that the task is impossible; it’s not.
But the owners and operators of these facilities are making a mistake if they think that sticking to past methods or the status quo in running their facilities will help them maintain good relationships with their insurers.
According to James Ferriero, underwriting supervisor at Philadelphia Insurance Companies (PHLY), one of the factors impacting property insurance is extreme weather events that impact property exposures across the board.
Wildfires in the West, for example, are making the importance of implementing best practices in fire safety increasingly pressing. For his part, Ferriero said he and his underwriting teammates at PHLY tend to look more kindly on modern construction.
Owners of single-story nursing homes with outstretched wings, what Ferriero called a “cobweb” design, have a better chance of attracting risk transfer capital from insurance companies if they are code compliant and equipped with commercial grade fire doors and NFPA-13 listed sprinkler systems.
“We look at it more favorably when we’re looking at risk,” Ferriero said.
It conjures up a scenario where a fire breaks out at the end of a wing in a nursing home with this cobweb design. Fire doors, an alarm system, and an NFPA-13 sprinkler system could go a long way in slowing the spread of a fire and giving firefighters enough time to extinguish the fire.
This, compared to what we might see in an older two- or three-story facility, would result in less property loss due to fire, not to mention the even more important goal of limiting worker deaths and injuries. residents.
Operating as they do in a niche segment of the insurance market, retirement home owners need to understand that there is a limited range of carrier appetites to underwrite their risk. Carriers affected by floods and fires in various parts of the country are increasing deductibles and limiting capacity in some cases, which amplifies the importance of good risk management.
Ferriero said PHLY customers can benefit from water and temperature sensors, provided free of charge as part of PHLY’s property coverage, placed in strategic locations within a facility. These sensors can detect, in one example, plummeting temperatures that could put a water pipe at risk of freezing, bursting and contributing to destructive flooding.
Another factor, other than severe weather, that influences property underwriting in general is the issue of
Supply chain issues, material costs and labor shortages combine to make it more difficult to determine the appropriate replacement value of commercial properties. This is where Ferriero said PHLY underwriters depend on their partnerships with agents and brokers.
“Educating policyholders that macro-economic factors could lead to higher replacement costs and therefore the need for stronger insurance coverage is a key role for brokers these days,” Ferriero said. “We are very fortunate that our partner brokers and agencies have been really supportive of this initiative.”
“I think it’s difficult, from a broker’s perspective, to educate policyholders,” he added. “But we are doing well in this balancing act thanks to our brokers.”
Worrying Auto-Gravity Trends
Another area that business owners and risk managers in the retirement home niche sector need to pay close attention to is their fleet exposure. The risk to these companies is compounded by the fact that many employees in the long-term healthcare sector could use their personal vehicles to transport elderly patients to hairdresser or doctor’s appointments.
Another factor to consider is that the severity of car accidents actually increased during most of the pandemic shutdown. As more and more people return to the office, the frequency is also set to rise.
“From a best practice perspective, the ability of an insured to confirm appropriate insurance for their employees is particularly important,” Ferriero said.
In cases where the employee is found to be uninsured or underinsured, any exposure will fall on the employer’s policy.
“With more and more people, more employees, back on the road, we are seeing an increase in frequency, as well as severity, within this uninsured motorist (UM) exposure coverage and underinsured motorists (UIM),” Ferriero said.
Again, this is a place where connectivity for the purpose of collecting useful subscription data can be an advantage.
“Another free service offered by our risk management team is GPS monitoring devices,” Ferriero said.
These devices can be placed under a vehicle’s dashboard and used to record everything from how fast a driver accelerates to how hard they brake.
Customers who have these devices in place may find that they receive more favorable coverage terms from underwriters on their fleet programs.
“I would say driver safety is so important to this niche segment because of patient driver exposure to various types of appointments,” he said.
This exposure can be multiplied by the use of vans that can transport a dozen or more elderly clients to appointments during a trip.
There is also the added consideration that staff loading customers with mobility issues into vans and cars should be trained in the safest methods of doing so. Ensuring elderly residents in wheelchairs are properly secured should be a mandatory training area for nursing home staff, Ferriero said.
Keeping pace with ongoing changes
Some things we know for sure. The evolution of climate change, ongoing macroeconomic variations and the fact that an aging population will increasingly need long-term care options will require optimal risk management in the nursing home sector.
Organizations that have invested in up-to-date construction, including commercial-grade fire doors and sprinkler systems, and the technology available to best manage fleet exposures and train personnel to reduce them, may well come out on top in their renewal meetings with sales reps. insurers.
However, failing to act in days like these will not be a sustainable path.
“Owners are putting their insurance programs at risk if they don’t have best practices in place, such as training programs, defensive driving policies, and training videos they can use on the web. “, Ferriero said.
“In the availability of auto and property coverage for niche classes, [such as nursing homes] there may not be as many carriers willing to provide coverage as there would be for other sectors,” Ferriero said.
“Having best-in-class training programs really allows the insured to be able to work with an A-Plus rated carrier or an admitted carrier versus the non-admitted market,” Ferriero said.
“That’s what we’re looking for, I would say.” &