Insurers still willing to cover sector despite high profile exits, new study finds
Care home insurance has yet to reach a ‘crisis point’ with insurers refusing to provide cover for the sector, according to a new report by the Chartered Institute of Insurance.
The study, carried out by the CII into the availability and future market for care homes liability cover, follows a series of abuse scandals, which have sparked concerns about a rise in related claims. A series of legal cases has increased care homes’ liability for neglect or abuse carried out by their employees.
Insurance Times reported in December 2013 that Ecclesiastical, which had a 10-15% share of the care market, had decided to pull out of covering private homes. Hiscox announced last year that it had also decided to exit care homes.
However insurers contacted by the CII reported that recent high profile cases, most notably the Panorama investigation into abuse of elderly residents at the Winterbourne View care home, had sparked a surge in claims. Compared with other areas, like flood and public liability, claims levels remain “comparatively low”, according to the report.
It says a number of insurers are still willing to write care home business on standard terms without restrictions.
“Despite numerous high profile cases and documentaries insurance does still remain available via a number of markets.”
“The industry is not at crisis point yet.”
As a result, the report concludes there is no need for non-traditional insurance solutions, such as the creation of a mutual provider or additional government involvement.
The report emphasises the key role that brokers can play in ensuring the right protection is provided by ensuring risks are presented appropriately.
The CII study also concludes that care homes are a difficult area to underwrite due to lack of data, meaning that insurers will “often take an individual view on each case”.
However the report raises concerns that homes are being offered an inconsistent level of cover. For example, it says insurers do not offer the same basis of cover in respect of abuse with certain wordings including a definition while others exclude it entirely.