Insurance


they do. Reputations are built on the exceptional care that is delivered. We should remember that care home settings have always been open to potential risk. Claims can arise for a myriad of


reasons, from a claim of medical malpractice to a claim under employment liability for an employee fall or injury, but Covid-19 has brought its own set of risks which have increased the potential for insurance claims. Insurers have been watching the


unfolding care sector situation closely as they decide on their response and how, or rather if, they have an appetite for cover moving forward. As an independent insurance broker,


we have found locating insurance for operators in the elderly care market increasingly difficult. For other sectors within the care market, such as adult care, disability care and children’s care homes, we are not seeing the same issue. As an expert adviser who specialises in


insurance for the care sector, I have spoken to a number of our A-rated insurer partners to understand why there is a decreased appetite for this specific care sector. While insurers have not actually seen


an increase in claims so far, the apprehension appears to be around the potential for claims under employment liability cover for Covid-19. There is concern about the possible emergence of companies that may offer a no-win, no-fee case for anyone who has contracted Covid while working in a care home, creating a claim culture. Should this scenario arise it could lead


to significant reserves having to be put aside for potential claims. It sounds unlikely but that is exactly what happened with PPI only a few years ago. The reasons for claims are certainly very different but we could see the claim culture it invoked replicated for this pandemic. Claims may arise from employees,


residents or the families of either, if something should go wrong. This could be as the result of inadequate PPE or robust procedures to stop the spread of infection within a facility. The potential


for claims is high, but without adequate cover in place care homes will be unable to operate. We are an independent broker and


look across the insurer market to find the optimum insurance programme for our clients. It is becoming increasingly difficult to place business, which is a problem for everyone. A number of insurers have pulled out of the elderly care market completely and those remaining have increased their premiums to accommodate for an anticipated rise in claims. In order to understand why insurers


have got cold feet and premiums have increased it is useful to explain how insurance works.


How does insurance work? As a care provider, you need insurance cover to protect your business against the unexpected. If your premises were completely flooded or fire destroyed, you need to know that your insurance cover would allow you to rebuild and get your business back up and running. Thinking about the annual premium


you pay for this peace of mind, regardless of whether you think it is a lot or not, it is unlikely that it would actually cover all the costs incurred to recover


There is concern about the possible emergence of companies that may offer a no-win, no-fee case for anyone who has contracted Covid while working in a care home, creating a claim culture


14


from the claims incident. Even if you do not make a claim within


the premium year, you could see your premiums going up for the following year. We have all seen this at some point whether commercially or personally. This can be frustrating, but it is understandable when you really consider how insurance works. In reality, when you purchase


your insurance policy you are pooling your premiums and sharing the risk with many other businesses who take out the same insurance. If any of you have a claim you will be covered - the premiums collected will have formed a large reserve of funds and will be sufficient to satisfy the claims made. However, things start to be a cause


for concern when everyone needs to make a claim. The pool of funds available will diminish and the risk for the insurance company increases, and therefore, so do premiums. Historically, insurance premiums for


the elderly care sector have been set at relatively low levels. For example, a typical premium for a 30-bed care home would cost around £2,000. While insurance companies cannot increase the funds that have been collected to date, the reserve of funds to meet any claims needs to grow – so we are experiencing an increase in premiums.


Our experience and approach We have received enquiries from all sectors of the care industry during the Covid crisis including elderly care, children’s homes and rehabilitation centres, and ranging in size from single care homes to multi-site companies. The insurance products being sought


www.thecarehomeenvironment.com• February 2021


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