Adult and Child Care organisations today are operating in some of the toughest conditions ever experienced. On top of the day-to-day operational challenges of running a care business in a highly regulated sector, they are also dealing with an insurance market restricted in choice and options.
Our Burns & Wilcox expert Melissa Kalsi provide much-needed insights on market trends, specialty solutions, and tips for brokers.
The number of people requiring adult care services is on the rise over recent years—a trend driven by an ageing population, as well as the increase of disabilities among working-age adults. In 2019, nearly 2 million people requested adult care support, an increase of more than 100,000 since 2015/16.
In 2019/20 the total expenditure on adult care by local authorities was £23.3 billion, up more than £1billion from the previous year. The National Audit Office has estimated that £10.9 billion was spent on privately purchased care.
Regulatory insurance requirementsÂ
The regulatory bodies and local authorities for care and supported living services in England, Wales & Scotland requires the provider to have insurance in place and suitable indemnity arrangements to cover potential liabilities arising from death, injury, loss or damage to property, and other financial risk.
Most local authorities require a minimum limit of £10 million for Public Liability. Other types of insurance cover may be needed for some care organisations, depending on their specific liabilities, such as medical malpractice or professional indemnity insurance.
These are some of the reasons why using a care specialist broker and insurer is critical.
Specialty insurance solutionÂ
The insurance market had previously seen insurers offering large limits of indemnity with low unsustainable premiums for more than a decade. Whilst premiums began to increase in 2019, the trend towards higher rates accelerated even further by the pandemic, and the industry experienced a revolving door of carriers entering and exiting the sector.
The COVID pandemic also highlighted procedural weaknesses for care organisations preparedness for such events which increased risks for insurers and had an adverse impact on staffing levels which continues to increase risk for insurers. This resulted in higher premiums, more restrictive terms and reduced limits of indemnity.
Higher demand and lower insurance capacity has resulted in a need for high-quality, experienced brokers who understand the adult and child care services sector, and policies that provide the necessary coverage to help protect care organisation’s financial interests and source suitable insurance.
The Burns & Wilcox Adult & Child Care Services combined insurance product including liability, property damage, and medical malpractice is available to a wide range of care organisations involved in delivering specialist services to adults and children with a diverse range of needs. Underwritten by highly experienced team who understand the complexity of liabilities and challenges care organisations face.
Melissa recommends that brokers work with their clients to provide a complete history and profile of the care organisation when requesting a quote. Information over and above what is usually included in a standard market presentation allows the underwriter to differentiate between a risk where the provider can clearly demonstrate a strong emphasis towards managing their risk and those that are weaker in their approach.
Where claims have been reported, additional information about any changes that have been implemented to the business to prevent further losses, including employee training and improvements to care planning and delivery. Underwriters have access to regulatory reports and providing transparent details up front about any adverse regulatory outcomes speeds up the process of evaluation and where a robust plan of action has been proposed, the premium, terms and conditions applied will be more favourable.
Each regulatory body and local authority update their requirements regularly and the Care Quality Commission (CQC) will be introducing a new regulatory framework for care homes in England this year.
Care providers who place equal value on the level of care and profits are usually preferred by insurers and underwriters will look for evidence of this quality.
