MEDICAL MALPRACTICE insurance plays a fundamental role in enabling medical professionals and facilities of all types and sizes to carry out their jobs, safe in the knowledge that any genuine mistake or error will not end in personal or organizational ruin.
Various types of individual medical professionals and healthcare organizations require medical malpractice insurance, and the coverage differs signifi cantly depending on the insured. Few groups rely on the specific coverage features as much as longterm care facilities.
It’s fair to say that long-term care facilities are going through a tough period. The aging population is creating a demand for beds and resources that, in many cases, simply aren’t available. In addition, regulations are tightening, competition is increasing, and public perception of long-term care remains neutral at best as high-profi le scandals and exposes tarnish the image of the entire industry. Add into the mix the uncertainty surrounding the future of Medicare and Medicaid, and it becomes clear just how challenging a time this is for long-term care facilities.
For these organizations, having access to comprehensive and robust insurance policies goes some way toward alleviating the stress of the unknown. For brokers, long-term care represents a good opportunity to grow a book of business in a rapidly expanding space and make a real difference in the lives of the caregivers who are so integral to the comfort and wellbeing of the elderly and infirm. Flexibility, understanding and the ability to deliver customized products are essential kills for any broker eager to achieve success in long-term care.
Leading liabilities
Policies in the long-term care space generally include separate limits for a range of relevant and unique exposures, including professional liability, general liability, employee benefits liability, public relations, loss of property and disinfection event expense. Long-term care is filled with complex liability exposures, and insurance plays an important role in providing stability to facilities and giving nurses, doctors and directors much-needed peace of mind. Unlike typical errors & omissions policies, which insure a financial loss component, medical malpractice for physicians and surgeons is more focused on physical harm and long-term disability.
“The types of claims are all over the map in the long-term care space, but the primary claims we see are related to bed sores and negligence,” says Jordan Connelly, senior vice president at Worldwide Facilities. “A negligence claim may occur if a patient is left in bed for too long, is administered the wrong drugs or is dropped when being transferred from a wheelchair or out of bed to go to the restroom.”
Some of the broader policies on the market include coverage for defense costs in addition to the limit of liability, punitive damages and a consent-to-settle option. Most carriers who offer the consentto- settle feature place a hammer clause into the agreement in order to protect themselves should the policy be triggered. Coverage for evacuation expenses is also a key consideration for long-term care facilities, which can face hefty bills if they are forced to move patients, their belongings and healthcare equipment in a hurry.
“These features are all commonly being offered in the marketplace, but to get all of those together in one policy, you have to work a little harder,” Connelly says. “Brokers have to negotiate to the get the broadest terms possible.”
The biggest concern for long-term care facilities is a lack of beds. Organizations are forced to meet stringent tests and requirements before they can open the doors of a new facility, and although there are new assisted-living facilities opening every day, certain states have a moratorium on new long-term care facilities.
Long-term challenges
Medical malpractice laws vary by jurisdiction, and so does the way insurance is structured and sold. Brokers operating in the long-term care space need to develop a deep knowledge of each state’s rules if they want to grow their business outside their own state’s borders. The litigious nature of certain states makes them a tough place to operate for both long-term care facilities and insurance carriers.
“Carriers have been forced to pull out of some states due to of the lack of tort reform and just the increased frequency and severity of claims in the space,” Connelly says. “If carriers don’t have the proper retentions and performance on their book of business in a certain venue, they are pulling out to protect their book. The more difficult states to insure for longterm care would be New Mexico, West Virginia, Kentucky and Florida. Louisiana is also tough, but not as challenging as the other four.”
The rise of litigation across the board has made carriers more selective about which coverages they are prepared to write. Although Connelly says she wouldn’t describe the market as hard, she does recognize it’s a difficult space to specialize in. Losses are not trending in a good direction for carriers, and even though new markets are starting to offer medical malpractice insurance, Connelly sees more markets exiting the space.
“We do see new markets entering and trying to fill the void, but carriers are being very selective,” Connelly says. “A year ago, I would have received five or six quotes back after sending out what we would deem to be a difficult E&S space risk. This year, I am receiving only one or two quotes for the same type of risk.”
The terms and conditions of long-term care policies are getting tighter, retentions are up for more challenging accounts, and the price of premiums is spiking. Although broad forms are available, insureds are being forced to pay a premium to secure them.
“The biggest players in the space are Axis and Ironshore,” Connelly says. “RLI is selective in what they write, but they will step up on some difficult risks. CNA is still in the space, but their appetite is changing. Then you can go down to OneBeacon, TDC Specialty and Medical Protective. There are plenty of insurers willing to write the coverage, but the more difficult venues tend to be a little tricky.”
Although the policy documents offered by certain carriers have been standardized, customization is not uncommon, and brokers need to be ready to manage each client on a case-by-case basis. Medical malpractice insurance in the long-term care space has the potential to be rewarding in many ways, including financially, but those rewards are often accompanied by unexpected complexity. If brokers lack experience and knowledge in the space, they run the risk of overlooking some key coverages for their clients.
“Find your underwriters who specialize and have expertise in this area, and learn from them,” Connelly advises. “If other brokers in your company specialize in long-term care facilities, go and learn from them; it’s the easiest way to do it. Dig through policy forms, and figure out the differences and how they could impact a client.”
