A Look at Senior Care Liability Claims

The average indemnity payments paid for senior care facilities have more than doubled over the past 10 years, according to Liberty Mutual/Ironshore’s inaugural Senior Care Claims Study, which examined senior care claims reported under Liberty Mutual/Ironshore Healthcare policies over the past 12 years. Legal system abuse has substantially increased average claim costs, driven by aggressive legal strategies employed by plaintiffs’ attorneys, the study says.

In this abbreviated interview, Liberty Mutual/Ironshore’s Dennis Cook, healthcare president, and Lynette Perkins, executive underwriter and director of risk management, discuss a few of the study’s findings with Insurance Journal. View Liberty Mutual’s Senior Care Claims Study Report.

The study showed that the average indemnity payment across all senior care facilities–independent living, assisted living, and skilled nursing–has more than doubled over the past 10 years, surging to $226,028 in 2024. Was that surprising? What’s driving that trend?

Dennis Cook: The level of the increase in severity is somewhat surprising. The industry has seen it … Indemnity payments that used to be at, say, $200,000 or $100,000 grow to be more at like $400,000 and higher. It is also seeing a big increase in the excess losses, which is also concerning. The industry had probably about 10 years where we didn’t see that many excess losses, but now we’re seeing them, and we’re seeing them from legal system abuse. … The frequency of severity is an industrywide trend, but we are seeing it in our book, too. … But in general, we see indemnity payments across all industries going up from a casualty business perspective. It’s a little bit of social inflation, and I do believe that litigation funding is really driving the bulk of it.

The most prevalent cause of loss in your book is resident falls, accounting for over 45% of claims. What are some of the things that you recommend from a risk management point of view to prevent falls?

Lynette Perkins: It’s really a multifaceted approach. First and foremost, delve into the root cause of that fall. That begins with the fall risk assessment. So, it’s identifying the fall risk to begin with, implementing person-centered, resident-centered, individualized fall risk interventions, assessing those for effectiveness, and maybe changing those … and really diving into what’s the root cause of the fall. Look at the physical environment, look at a medication regimen. Maybe there’s been an overall decline and we need to reassess the fall risk. Take a multifaceted approach, and it must be an individualized approach as well, which supports the regulatory requirements. … It starts all the way from the interviewing process to onboarding, making sure that all staff, even temporary staff, go through an onboarding process that emphasizes the facility’s policies around fall management, and safety in general, including abuse or neglect prevention. And there must be annual re-education for the existing staff, and in between there, you have to have a mechanism for auditing and monitoring to help mitigate risk and maintain that culture of safety.

How do you look at safety from an underwriting perspective?

Perkins: We, of course, look at publicly reported data for nursing homes, we have survey reports readily available for us. If there is a concerning survey finding, we may ask for a policy or a process around that finding to make sure that whatever the deficiency was or the incident that occurred that they have implemented a quality assurance and process improvement program, which is an essential part of any senior living facility–having the ability to review quality indicators and outcomes and then make changes based on those. …We do weigh very heavily on the quality and reputational findings as part of our research.

Some senior care facilities may be experiencing added pressure as changes to federal Medicaid and/or Medicare funding evolve. How do reimbursement concerns affect risk?

Cook: We pay close attention to the financials of facilities and how reimbursement is coming in as part of the underwriting process, especially over the last few years because [facility] retentions have been increasing. We have to pay close attention whether a facility or the operator can take on and satisfy the deductible, or SIR [self-insured retention], that they may take on. We are very careful about that because getting that reimbursement from the facility or operator for the retention can be a difficult process. There’s a lot of bankruptcies and receiverships in this space, and that comes because they’re relying on the government for their reimbursement, and it doesn’t always come in a timely fashion.

Any advice for agents and brokers when approaching a market for a senior care facility risk?

Cook: My first piece of advice is always to build a relationship with the market. Introduce your client, the facility operators, so that we get a better understanding. It’s hard to underwrite from just applications and what you get online. When you talk to clients and get to know them and hear their strategic plans and where they can use help, that helps in the underwriting process. … And if we can sit down with the client and hear what they want to do from a risk management perspective, then we can help in building out a strategy that helps the facility and provides residents with a better quality of life.

Topics Claims Liability