Insurance in the Care Sector, much the same as other sectors, has faced a plethora of challenges in the past four years. The pandemic was arguably the most expensive event in recent years to hit the insurance industry with travel cancellations, business interruption claims, investment losses, and general uncertainty regarding future liability exposures.
The Care Sector played a central role in the fight against the pandemic with the invaluable services provided to people suffering from Covid-19 and those facing the loss of those nearest to them.
What was the impact of COVID-19 on the insurance market for the Care sector?
As a result of these unforeseen circumstances, the market entered 2021 with significantly reduced capacity and a fast-diminishing appetite for care organisations. Insurers were uncertain to the nature and extent of future claims they may become liable to pay.
The result of this was:
- Drastic premium increases for the following renewal cycles with clients in the Care Sector being prime targets of these increased premiums
- Cover reductions also became increasingly common, namely around the availability of communicable diseases cover
- Insurers also significantly reduced their new business appetite and instead focused on maintaining their existing book of business. This meant care organisations frequently had no option other than to renew with their existing insurer, with a higher premium and reduced cover
What to expect for the Care sector insurance market in 2024
While this seems bleak for the Care Sector, the market is now softening with capacity re-entering the market and new opportunities being considered by insurers.
As we get further from the height of the pandemic, the market is now much more receptive to writing new risks and is being far more flexible with their existing book in an effort to retain this business.
Although this is positive news for the Care Sector, the scars of the pandemic linger when new business is considered so it is more important than ever for risks to be made as attractive as possible to insurers.
If positive risk factors such as a robust risk management culture coupled with a good claims experience can be evidenced, insurers are much more motivated to consider new business. Presenting a positive risk profile to insurers would also create competition in the market in order to achieve the best available terms from insurers.
5 tips when presenting risks to insurers
- Be as clear as possible with every aspect of your business when discussing it with a potential insurer. Explaining exactly who you look after and how you deliver your services is essential for insurers to understand your business. Describe what level of care people require and how you support them in their day to day lives. If people have serious complex care needs, then detailing how you manage this is far more important for an insurer to understand than vaguely describing a service.
- Ensure you are clear with what type of treatments you can provide to your service users. Do you provide nursing lead care, physical care or simply support? Are any third-party specialists used for therapies, assessments or counselling? Differentiating the services you provide and those provided by a third party makes a big difference on your premium and an insurer can decide if their Treatment/Malpractice wording would adequately respond in the event of a claim.
- Have a strong risk management strategy that continues to improve key areas of the risk that could be seen as problematic by insurers. Examples of this in the Care Sector would be: the management of infection control; having robust training plans in place that specifically focus on preventing assaults on staff; a proactive approach by management to demonstrate compliance with the regulators;, and how claims are managed by the insured to prevent reoccurrence. Griffiths & Armour clients have access to our industry-leading risk management platform, RMworks.
- Work with your broker to paint the best possible picture of your risk and create a solid renewal strategy that is carried out in a timely manner in the lead up to renewal.
- Assemble claims data that provides a positive impression of the risk, with a claims triangulation that shows the progression of claims over time including details of any large losses that have occurred. Ensuring claims data is kept up to date and any older or settled claims have been closed is vital, as is providing an update on whether the incidents noted are formal claims or have just been notified for information purposes. This was particularly difficult during Covid-19, when many insurers noted several outbreaks in care homes and made precautionary reserves, but then failed to close these when claims didn’t materialise.
Overall, the market is far more receptive to care risks and if the presentation of the risk is conducted properly, a positive outcome can certainly be obtained.
Griffiths & Armour have a long and established presence in supporting care and health sector organisations with their insurance programmes. Our dedicated team of specialist brokers are always available to discuss any questions you may have which relate to the management of your insurance and risk requirements in this and other sectors.
If you require further information on any aspect of the above, please get in touch.
