This lady climbed onto a garbage can to get over a fence…
That sounds like the start of joke, but in this case, it was a nursing home resident with dementia who had wandered out a side door without being seen. And she did make it over the fence by falling on her face. She wandered a bit before she was discovered. Luckily, she suffered only minor bruises to her face and no serious injury.
Insuring the people who care for the elderly presents its own set of challenges, but with an estimated 28.5 percent of the population headed into or already in retirement, according to Senior Underwriter Liz Stevens of Argo Pro, eldercare services “are an area of huge growth because they are what people look for to take care of their loved ones.”
The universe of eldercare services is generally divided into three categories—home healthcare, assisted-living facilities and skilled nursing facilities. Within each category there can be big differences in the amount and type of services provided and the skill level of the individuals providing the services.
“It’s a booming market throughout the country, so any agent looking to diversify business in a soft market should go after these facilities,” said Senior Professional Lines Broker David Derigiotis of Burns & Wilcox.
Derigiotis said the biggest growth is in home health care, where services can range from companion care—where basic needs like cleaning, cooking and accompanying the client to doctor and hair appointments are provided by someone with no medical background—to round-the-clock skilled care provided by a nurse or other licensed professional. It can also include physical therapists who come to the home.
“People want to stay in their homes longer and many can do so because of long term care insurance,” said Derigiotis. Stevens said that the soft housing market, which makes it difficult to sell a home, also prevents people from moving to in-patient facilities.
Outside agencies generally will provide eldercare services through individual contracts with clients. Professional liability claims for home-healthcare workers tend to be rare, with most involving either mistreating a patient, sexual molestation or third-party theft, so agencies need to do background checks before hiring employees.
Assisted-living facilities generally provide independent living in an apartment-type complex with only community dining, social congregation areas, safety bars and emergency pull-cords. In assisted living, claims tend to come from keeping patients too long, beyond the facility’s ability to keep them safe, said Stevens. It is important for facilities to have a resident agreement that allows them to move a patient whose health has deteriorated to a more appropriate level of care.
The largest premiums and claims usually come from skilled-nursing facilities, commonly known as nursing homes, though that term can apply to rehabilitation centers and other less-intensive institutions, said Vice President Kevin Price, who heads the Allied Medical Division at Argo Pro. Skilled-nursing facilities provide round-the-clock residential care to those who simply need a higher level of care or are bedridden.
The economic issues at skilled-care facilities are well known. Low Medicare, Medicaid and insurance payments keep margins thin, which often leads to poor training, inadequate staffing and high turnover rates. Add to this mix patients who have dementia or are too ill to communicate their needs, and claims are inevitable.
Elopements can be a problem, said Price, adding that he’s seen a “a lot of dramatic stories involving residents leaving a facility in cold weather and freezing to death or getting hit by a motor vehicle.” He has also seen several cases where an individual’s physician ordered food to be pureed, but a worker mistakenly served whole food, causing the patient to choke.
Price said that the largest source of claims at skilled-nursing facilities “tend to come from patients being bedridden and developing bed sores that become infected, or contracting pneumonia or from patients not being fed properly. In assisted-living facilities, the largest number of claims seem to come because the patients are not bedridden, but are walking around and falling, or are wandering off.”
Retail agents can benefit from the burgeoning eldercare industry with the help of a wholesaler. Burns & Wilcox has carrier relationships that allow it to offer excellent eldercare professional lines products appropriate for these risks. One London market relationship, for example, uses a thorough claims database of skilled-nursing facilities to quickly respond to agents with an indication of its interest in writing a particular risk and the premium it would charge. “We pride ourselves on access and quick response,” said Derigiotis.
Like many industries, healthcare agencies, assisted-living facilities and nursing homes all purchase professional liability insurance that covers the entity and its employees. Unlike some, these professionals do not need to be licensed or even highly skilled. Virtually everyone employed by an eldercare service agency or facility and actually renders some service is considered a professional. That can include an aide without a high school diploma, a highly skilled nurse practitioner or physical therapist, and everyone in between.
In this segment, insurance carriers usually sell both professional liability and general liability coverage because claims can fall into a very large gray area, said Derigiotis.
“Someone spills coffee in the hallway and a patient wanders out and slips and falls on that coffee. Is that a general liability claim because someone should have cleaned it up or a professional liability question because that person really shouldn’t have been walking around alone unsupervised,” said Price. “That’s a classic question.”
“The answer would depend on the facts of the case. In the real world, you try to provide both the general and professional liability with the same limits and the same deductible” so you don’t have to be too concerned with establishing the specifics or trying to work out a resolution with another insurer, he said. When insuring both lines and receiving a claim that could fall under either, Argo Pro, which has been providing the coverage for about 14 years, generally assigns cases involving clients to professional liability and those involving visitors to general liability, Price said.
Though the need for eldercare obviously is growing, are people coming in to fill those jobs? Derigiotis has noticed a trend in workers shifting from endangered or obsolete jobs into the healthcare field. In the Detroit area, where autoworkers’ jobs have disappeared, for example, there have been reports of many retraining to apply their mechanical skills to operate imaging and other healthcare technologies. Others, like Ed Wozniak, who worked as an automotive engineer at Chrysler for 15 years, have become nurses. All will need professional liability coverage.