LONG TERM CARE / SENIOR LIVING

2024 will see further incremental gains. Lease up rates at new communities are trending back toward the pre-pandemic normal. Staffing shortages are still very prevalent, and expenses are elevated. In addition, interest rates are high which creates a barrier to the availability of financing and equity for building new projects. An increase in HUD lending will also likely lead to constriction of new facilities and the acquisition of existing facilities nationally.

Inflationary and economic pressures are driving smaller providers to seek the benefits of partnering with a larger system to shore up the benefits of economies of scale. As the senior living industry becomes more well known among the general public, it will no doubt endure much more scrutiny from the press, lawmakers, and the general public. Severity/nuclear verdicts on developed losses are more frequent. Markets with extensive experience in the space all report an uptick in claim frequency and severity, particularly in the memory care segment. Generally, verdicts have been increasing with overall claims activity returning to pre-pandemic levels. Underwriters and insureds have and will continue to see claims development that was otherwise hampered across 2020 - 2022 by the pandemic and its impact on the legal system.

While several newer markets have entered the space and added competition, their longevity in the space is unknown. Over the past 12-18 months, there are a few program-driven markets that have entered the senior care space, but there are concerns about their staying power in the marketplace and ability to pay claims long term.

Capacity on the excess side continues to be unpredictable with no single carrier consistently offering large limits. Renewal retention will be a battle between large vs. smaller carriers. The rising cost of staffing, products, and other insurance lines will all cause clients to make difficult decisions around whether to partner with a carrier with cheaper pricing or a market that may prove more stable over time. The top echelon carriers will continue to ask for a small rate increase to cope with developing claims.

On a more positive note, technology and wellness will play key roles in 2024 through the use of telehealth combined with the adoption of smart sensors, wearable health devices, and updated emergency care notification devices. The active adult segment will see a rise to make the industry more appealing to the next generation.

MISCELLANEOUS MEDICAL

2024 has seen new market entrants for primary and excess capacity. In the past it would be safe to assume that the growing amount of carriers would lead to flat pricing or slight reductions. Standard Misc. Medical accounts, clinics, surgery centers, and home health/hospice care are often seeing flat pricing. Incumbents are attempting to push for minimal rate increases. Due to increased competition, it is possible to undercut incumbent prices if an account has minimal loss history or exposure increase; however, underwriting typically requires historic and projected revenue data as well as patient encounter numbers to justify increased interest. Markets are continuing to adapt to telehealth. Claim and underwriting data is much more detailed today, and this data has led to a more “surgical” approach to risk appetite. Excess capacity remains plentiful where needed.

Middle market and larger accounts are also seeing more scrutiny than smaller risks, with more attention being given to claim development as well as growth trajectories. Specific classes, such as intra-operative, neuromonitoring, fertility clinics, and abortion clinics, are increasingly difficult to insure. Also, HNOA is receiving much more underwriting scrutiny and coming with more premium.

Benign classes will see reductions via competition, but the same will not be true for all miscellaneous classes. Nurse staffing services and LTC facilities are more difficult. This segment can also encompass medical spas, which have trended toward overall wellness risks, and many different facility types are emerging. This is prompting markets to ask specific questions about emerging services/exposures. Underwriting is expressing concern over use of semaglutide, specifically in medical spa settings and compounding pharmacies. Because Misc. Medical can encompass facilities as well as telehealth providers, nurse staffing, or companies providing services to facilities, there is an increase in requirements from markets for third party contract language.

PHYSICIANS

Overall, the physician space remains elevated from a pricing perspective due to the continued trend of nuclear verdicts and emergence of new venues considered more hostile, such as GA. This segment is starting to see greater competition for certain surgical specialties, such as orthopedics (with or without spine). Most renewals are still seeking rate in the 5% - 8% range, but increased competition is helping to keep incumbent rate increases low. There has been some account movement; however, such decisions must be carefully considered to determine if the move is appropriate based on physician age as those approaching retirement age would give up years of vesting toward a free retirement tail. Admitted markets are more aware of vicarious liability related to the corporations that physicians are working for, but there is no continuity among carriers on the point, so it must be carefully assessed.

HUMAN SERVICES

2024 will be a continuation of 2023. There has been a significant increase in the flow of this business into the wholesale channel, and terms in the E&S market are a stark contrast from the admitted market. The marketplace, in general, is reacting by honing their appetite carrier by carrier. Non-renewals coming into the wholesale channel require quality submission information and lead time for proper marketing. From a coverage perspective, continued pressure on sexual abuse capacity is anticipated, specifically in the excess space. Stand-alone SML facilities are being used more frequently to round out coverage.

CORRECTIONAL CARE, LOCUM TENENS, & STAFFING

Correctional care, locum tenens, and staffing remain some of the most difficult placements in the marketplace. The correctional care market continues to be limited, but market appetite is clearly defined. Some have an appetite for small, single location exposures while others prefer accounts that can retain at least $250,000 for any one claim. Some specialize in correctional staffing agencies while others prefer municipalities that employ their own medical staff for jails/prisons. There is a growing number of markets that will offer excess for locum tenens, but the primary market has stabilized in the number of viable carriers, so pricing is slowly increasing on the primary.

For both locum tenens and staffing, very few carriers exist for operations that wish to provide services on a national scale. Few carriers can offer the varying limits needed by state to adhere to PCF requirements like MCARE and avoid venue issues. However, no carrier exists that can fully avoid venue issues related to state-specific requirements to provide admitted coverage. At best, the carriers that have the fewest problems with venue issues are those that have the ability to offer a separate admitted policy solution when needed. Nurse staffing is a booming industry with companies growing 2x, 3x, or 4x YOY. However, those placed in nursing homes continue to be a challenge due to growing verdicts. For those with hospital placements, more markets will consider coverage, but there are challenges when it comes to placing nurses in L&D, ER, OR, and ICU areas. Those with larger contracts requiring certain coverages will find the marketplace shrinks substantially.

Pricing across all segments of staffing and locums continues to rise. For smaller locums and/or contract staffing operations with a very limited geographic footprint, additional markets that do not consistently write staffing risks can be approached. However, many staffing businesses want to expand their geographic reach, and if coverage is placed with a carrier that is not open to such expansion, a mid-term move or secondary policy issue can emerge. For correctional risks, if limited in size and scope to only a specific correctional location there are more markets willing to contemplate coverage. Larger correctional operations with multiple locations and venues will find appetite is extremely limited and primary terms may require a large SIR as well as limited terms. When it comes to submissions, locum operations should provide a breakout of days and/or hours by specialty and venue. Some carriers may require further breakdown by venue into specific counties. Locum tenens and staffing carriers have also begun focusing on organizations’ credentialing protocols. Having a thorough, formal, written credentialing process that meets carrier requirements can be the difference between writing and not writing an account.

CYBER

Cyber rates have predominately stabilized for most insureds, as capacity re-entered the market in 2023. While the healthcare sector remains one of the more difficult classes for cyber insurers, the increased capacity has worked to curb the rate increases that were seen in 2021, 2022, and the first half of 2023. Buyers with a clean claim history, and proper security controls are consistently seeing flat rate renewals and even rate reductions where warranted. While premiums aren’t likely to drop significantly in 2024, a stable marketplace with cyber insurance readily available for most buyers in the healthcare sector is anticipated. However, it is possible that rates may start to tick up in Q3 or Q4 due to claim activity over the last 12 months.

HOSPITALS

Trends evidenced in 2023 will have an adverse impact on 2024. During the second half of 2023, the marketplace saw a continued pattern of hospital-employed physicians with multiple claimants alleging sexual misconduct. 2023 also included massive (nuclear) jury verdicts, but many were limited by high-low agreements that capped the final resolution. Claims regarding sexual misconduct are clearly the most common of the multiple claimant or batch cases, but there are others. Some hospitals saw fentanyl diversion cases. Headed into 2024, there is only one new market entertaining hospital excess business, as the others are re-examining underwriting appetites. Simply put, national news regarding hospital litigation and the incurred losses are having an impact on price for both primary and excess liability.

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