First published: October 2021
In September 2020, we reported on the impact the pandemic had had on the care insurance marketplace; 12 months on, we felt it would be useful to provide an update on the insurance market and share some advice on best practice, to help you achieve the best insurance options for your organisation at renewal.
There are some specific areas of cover and/or sectors that are being impacted by the hardening market and the pandemic. Here, we cover what these are and what it could mean for you and your care insurance.
Communicable Disease Cover
One of the big talking points has been the exclusion of “communicable disease” cover from policies.
You will typically find the communicable disease exclusion applied to the following sections of cover:
– Material Damage (Property, including Business Interruption)
– Public Liability
– Treatment Liability
– Professional Indemnity
– Management Liability/Directors & Officers
It is important to make clear that we have not seen any insurer remove this cover from Employers Liability. However, there will more than likely be new endorsements added to your policy at renewal, detailing what risk management you must have in place for policy coverage to be valid. Such an example would be conditions around Infection Control.
With Employers Liability, we are looking at cover for the scenario where an employee contracts Covid-19 and can demonstrate their employer was negligent, and that it was this negligence that resulted in them contracting the virus.
Public Liability has been a main concern for providers. Here, we are looking at cover in the scenario where a member of the public/an individual that is cared for contracts Covid-19 and can demonstrate that their carer/the company was negligent, and that it was this negligence that resulted in them contracting the virus. The exclusion of this cover has given rise to some providers not opening care homes for visits despite regulators advising they should; their choice simply reflecting the fact that any claims would no longer be covered by their Public Liability, and the financial impact of any claim being potentially catastrophic to the business.
Unfortunately, we cannot see this exclusion being lifted. The main reason for this is that most exclusions we are seeing expand beyond Covid-19. Insurers do not want to be exposed to another pandemic in the future as policies were simply not designed for this purpose.
Whilst most policies operate with a full exclusion, we work with a limited number of markets (including both domiciliary care and care homes) who provide a “buy back” option. This means, for an additional premium, you are able to buy back some cover for Communicable Disease under the Public Liability section. Usually, this is for a much lower limit of indemnity (between £25,000 and £50,000). This buy back option is usually dependent on having at least a “good” CQC rating (or other regulatory equivalents). Other factors, such as loss history and infection control risk management, will be taken into account.
At McClarrons, we have been advising clients to look into the infection control grants available as we have received feedback from some clients who have had success in their “buy back” cost being funded by Adult Social Care Infection Control Funding; you can find out more here. Therefore, clients should be able to access options at renewal for their domiciliary care business.
Domiciliary Care Insurance
For the most part, the marketplace has remained open for business when it comes to domiciliary care insurance. There are some exceptions, where some providers have made the decision to offer renewal terms but cease trading new business for the time being.
We are finding that insurers are wanting more clarification around providers who are also involved with supported living, for example, by knowing if it is simply care and support provided in these settings, if the property is owned/managed by the provider, and if are they involved with the tenancy agreements.
In the last 6 months, we have seen a number of new domiciliary care insurance products brought to market and are aware of at least one more in development. Whilst this marketplace competition is welcomed, the insurers’ risk appetites, along with coverage differences such as “claims made” wordings, need special attention.
Residential & Nursing Home Insurance
Whilst some insurers are still not welcoming new business for elderly residential and nursing home providers, we have seen some capacity return to the marketplace, which is welcome news.
Whether you are renewing with your existing insurer or looking at alternatives, insurers will be looking for much more information than in previous years, such as:
- Covid-related deaths
- Infection control measures
- Types of residents
Regulatory Inspection Reports
If your latest regulatory report is rated as “requires improvement”, as a minimum, you will need to provide an action plan detailing the improvements and timescales you have committed to. As well as this, we would also recommend detailing any further risk management or investment in the business such as the use of independent care professionals to audit and make any improvements. Evidence of any further correspondence from either Local Authority or Regulator detailing how they feel about the improvements made would also be beneficial.
All too often we find insurers have declined to provide a quotation because they have not been supplied with the full background information and/or the full picture on what has been put in place to rectify the situation. We cannot stress enough the importance of working with an insurance broker or provider, who fully understands your requirements and the sector you operate in, to ensure you are provided with the cover you require.
Insurers are also looking more closely at previous inspection reports to identify any trends; brokers should also be reviewing this and prompting clients for further information prior to speaking with insurers.
So, whilst it is more difficult to secure favourable terms when a regulator has determined you “require improvement”, it is not necessarily impossible.
Advice to providers due for renewal:
- Use a Specialist
There are very few care insurance specialist brokers out there, the ones who do truly specialise will be able to communicate what your options are in terms of remarketing, what your expectations should be in terms of pricing, and outline coverage and timescales.
Usually, specialist insurance brokers will have a dedicated care team who will be knowledgeable on the wider market and be able to advise you on the products that are available and suitable for your unique requirements.
- Timing
Timing is key – we would recommend looking at your insurance renewal 2 months prior to your renewal date. If there are complications, such as your inspection report or loss history, then you may want to select a broker even earlier than this.
- Be Involved
Agree a renewal strategy with your broker, understand which markets are being approached, if they are remarketing and what the reasons are for this (there could well be legitimate reasons).
Be prepared to spend more time working with your broker; to get the best result for you, they will need a time commitment to get the information they need and present the options back to you.
- Be Strategic
If you are going to remarket your care insurance, we urge you not to flood the marketplace by approaching numerous brokers. The care marketplace is still a small world and an Underwriter receiving a submission for the same risk from multiple sources will work to your detriment.
Instead, select one other broker having properly vetted their credentials, considering whether they can demonstrate that they are care insurance specialists. Can they provide testimonials from other care providers? Do you trust them from your conversation?
Make sure you give yourself enough time to properly consider any alternative. There is nothing worse than having to accept an unfavourable renewal because you have not got time to review an alternative option.
We fully appreciate that time is a very valuable commodity in the care sector; with the continued staffing crises and Covid still at the forefront, we appreciate a larger time commitment on insurance is not what providers want to hear. However, on the flip side, given the market is starting to open up, there is a good chance an option may be available that wasn’t there last year. Given the premium increases over the last 18 months, it may well be worth the time commitment (it has saved some clients thousands of pounds).
Who are McClarrons and how can we help?
A family-owned independent insurance broker with a specialist team dedicated to care, social welfare and charitable organisations.
Our technical insurance experts undergo training from a CQC “outstanding” rated provider to aid their understanding of the care sector. The purpose being to couple their sector and insurance knowledge to better communicate, advise and protect our clients.
For any independent insurance advice or to arrange a complimentary insurance review, you can contact the McClarrons Care team on 01653 600477 or at care@mcclarroninsurance.com.
