As care homes across the UK have been working to manage the Covid-19 crisis, they are also facing challenges in terms of available insurance, as Liz Booth reports
Back in August this year, care home bosses urged the government to intervene and help the sector, which was battling to survive financially.
The government had announced in April that bereaved family members of health and social care workers
who have lost their lives to coronavirus will be entitled to a £60,000 payment.
But care home owners said the bigger issue was insurance for the home itself, with Care England warning the situation was “an absolutely enormous threat” to the future of the sector.
Chief executive, Professor Martin Green OBE, says: “We have seen people who used to pay £12,000 being told they have to now pay £98,000 and also will get less cover than before.”
He tells The Journal: “Care England has been highlighting these issues to the Department of Health and Social Care (DHSC); however, time is of the essence. As of yet, there is no concrete policy on the table, meaning there is little certainty for providers. We have continued to highlight specific examples to show the extremely burdensome nature of members’ experiences.”
He warns that the sector will face real challenges when insurance premiums rise in the winter months and that “has the potential to cause a perfect storm.”
“The insurance market is tightening, with fewer and fewer insurance providers for care providers to turn to for cover. Then they face rising premium costs and exclusions on Covid-19-related claims/communicable diseases.”
At the same time, the National Care Association says 68% of respondents to a recent survey reported an increase in their premium, with 35% changing insurance provider. The vast majority (93.5%) said they had no Covid-19 cover in their renewal.
But Towergate Insurance explains that this is not just about Covid-19. Rates have been on the increase for the last nine consecutive quarters due to:
- Significant global catastrophe losses ($100bn+ (£77.5bn) a year) in 2017-2019 (hurricanes, windstorms, typhoons, wildfires, etc), the effects of which have fed through to the UK market.
- UK claims for flooding/storms are increasing in both frequency and severity on an annual basis.
- Double-digit attrition claims inflation on motor fleet and liability losses due to Brexit and exchange rates, growing claims litigation culture, and regulatory reforms (such as the Ogden Rate).
- Property losses from cladding since the Grenfell fire and various food/hotel fires have had subsequent impact.
Towergate admits that this has meant several insurers and Lloyd’s syndicates no longer offer cover to certain areas including the care sector, allowing the remaining insurers to become highly selective when looking at new clients and targeting the best risks based on Care Quality Commission and claims performance.
THE CLAIMS PICTURE
Insurers have already started to receive Covid-19 claims, reports Peter Kenworthy, a partner at law
He believes there will be several types of claims from residents, staff or visitors relating to Covid-19. He warns that insurers will look to see if the care home was acting properly – was there a lack of PPE; inadequate social distancing or poor processes; a lack of health surveillance/delay in identification of infection; or failure to provide proper care?
Bronwen Courtenay-Stamp, a partner at Trowers & Hamlins, adds: “There is an obvious risk that employees may seek to bring claims against their employers for injuries suffered in the workplace. This is likely to be employees who have allegedly contracted Covid-19.”
Tom Sampford, also a partner at Trowers & Hamlin, says public liability claims are also likely, covering general liability to the public and may also provide cover for liability for damages arising from accidental bodily injury.
“This will usually cover claims where individuals allege that businesses failed to exercise reasonable care in protecting them against or warning them of the risk of exposure to the virus,” he says.
“We anticipate these claims may well be difficult to prove, for causation reasons. As with employee claims though, tracking guidance, adapting processes as the situation evolves and the ability to evidence what was done – and what was not done and why – will be essential in managing claims.”
Finally, the pair say the market is likely to see claims from residents. “A duty of care is owed to individuals who are being cared for, whether that is in a retirement home, a nursing home, or caring for vulnerable persons in their homes. Where a person contracts Covid-19 (or a related injury) there may be an allegation that this was as a result of a breach of the duty of care, or ‘negligence’.”
LIKELY INSURANCE MARKET CHANGES:
- Total withdrawal from offering insurance solutions to the sector (and some brokers losing their own markets).
- Most insurers looking to pause offering terms to potential new clients.
- Most insurers looking more closely at start-up operations.
- Most insurers are looking to break existing long-term agreements, through increases to rates and premiums and updating policy wordings, in some cases using a combination.
- Cover changes are not blanket – some markets are excluding Covid-19 totally, including to public liability covers, others are looking to offer inner limit of cover around Covid-19 on public liability with severe restrictions, and others continue to offer wider protection and limits.
- One insurer is restricting cover beyond Covid-19 to exclude communicable diseases, which could include norovirus or the flu, as examples.Source: Towergate
Liz Booth is contributing editor of The Journal