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The changing dynamic between the care industry and the insurance industry

The changing dynamic between the care industry and the insurance industry | Insurance Business UK

The changing dynamic between the care industry and the insurance industry

Throughout the COVID-19 crisis, care organisations have been on the front line of protecting society’s most vulnerable people and so it stands to reason that the care industry has been heavily impacted. It was with this in mind that Markel created its recent whitepaper on ‘Care and insurance’ which closely examines how the lessons of COVID-19 will redefine the care sector’s insurance and risk management needs.

Find out more: Read Markel’s whitepaper on ‘Care and insurance’ today

Perhaps the key takeaway of the report is that this tripartite dynamic between insurers, brokers and clients in the care sector has been significantly changed due to COVID. As noted in the whitepaper there is a raft of lessons in what has happened over the course of the pandemic, and central to these is the need for strong communication and support services.

The care sector has faced an incredibly difficult 18 months, compounded by several quite high-profile exits from the insurance market. Several spokespeople shared their experiences of operating during this challenging time and commentary from Towergate Insurance Brokers highlighted how, as the risks associated with the care sector rose, particularly in the early days of COVID, the reaction from some insurance companies was either to walk away from the risk or to price people out of it.

Read more: Markel UK on the key challenges the COVID crisis is creating for brokers

In the whitepaper, Carolyn Baker-Mellor, head of care and charity care professions division, Towergate Insurance Brokers, highlighted that the decision of some insurers to pause new business or withdraw from the market meant brokers were faced with limited options and that it was during this time that the long-standing relationships between brokers and insurers came to the fore.

“Relationships were and are so important,” she said. “We would speak to Markel on a weekly basis to share our thoughts and look for answers to the questions we had been asked.”

Markel was aided in providing both proactive and reactive support and communication due to the internal structure that underpins its service offering, which allows the insurer to offer a blanket approach to coverage. As well as underwriting policies, Markel also provides a support helpline that deals with issues around regulation – a service that has proven itself essential during the crisis as the Markel Legal Advice Line saw a year on year increase of 29.6% in the number of calls it received in 2020.

Having such a service available has made all the difference amid the tumult of the pandemic, especially as some brokers and clients have been facing worryingly limited notices of non-renewal. The National Care Forum (NCF) highlighted that the insurance market for care homes, though relatively small, has tightened and continues to tighten.

Read more: Markel director on communicating strategic direction

Providers reported that some insurers said they would not take on new care home business and they were not being specific about what needed to change in order for them to start doing so. There were also reports of some insurers offering an extremely low level of public liability, described as “unrealistic” by the NCF, which added such terms would mean “that care homes will essentially have no meaningful public liability cover for any claims associated with COVID-19.”

Baker-Mellor added that, as the biggest broker in the care sector, Towergate was approached by large numbers of brokers for which they operated schemes on a wholesale basis. They found themselves with clients who were suddenly struggling for cover at renewal. For many, it was a case of negotiating an extension of cover for a period with their existing insurer while new cover could be sourced from those underwriters who remained supportive of the sector.

Certainly from Markel’s report, it is clear that the care sector needs to take the time to carefully evaluate its changing needs and what it is going to require from insurance services going forward.

This warning could not come at a better time as the care sector remains one of the UK’s biggest employers, which is predicted to undergo a rapid rise as the country’s population continues to age over the next 15 years. Markel’s report highlighted that if the adult social care workforce grows proportionally to the projected number of people aged 65 and over in the population, then the number of adult social care jobs will increase by 32% (520,000 jobs) to around 2.17 million jobs by 2035.

COVID has fundamentally impacted the nature of the relationship between care and insurance. The sector is now at a crucial juncture – and the role of insurance services needs to adapt accordingly.

You can now read Markel’s whitepaper on ‘Care and insurance’ here