In the Canadian market, long-term care (LTC) insurance has historically been limited to a handful of insurers. The segment, typically comprised of small, mid-size operators, usually purchases insurance via package policies from a single carrier to cover several different risks.
“Prior to the pandemic, LTC faced risks such as ageing infrastructure, increasing litigation trends, changing population demographics with an aging population, and a hardening property insurance market that led us into the spring of 2020,” Greg Fisk (pictured), Marsh’s national healthcare practice leader in Canada, told Insurance Business
When the pandemic hit, the landscape of the market shifted dramatically.
“A lot of our clients were on the frontlines dealing with a disproportionate number of COVID losses,” Fisk explained. “It amplified the pre-existing challenges we were facing and compounded new issues relating to COVID and communicable diseases.”
By the beginning of 2021, reinsurance for communicable disease risk in LTC was restricted and a host of LTC owners and operators were unable to purchase insurance for COVID or communicable disease liability.
“Insurers have effectively stopped writing new LTC business, which has left the sector with very few options,” said Fisk. With a lack of options , brokers, in turn, do not have the ability to provide solutions to their clients, and generate more interest in the marketplace.
However, brokers still have an important role to play for the LTC sector right now. Access to affordable and effective insurance is essential – and so they should focus in on helping their clients mitigate their risks to lower their potential premiums.
“Today, many LTC owners and operators have made risk management improvements in response to the pandemic,” Fisk said.
“PPE supply chains have been established to ensure effective distribution channels and adequate inventory, testing and vaccination regimes have been created in the homes for residents, staff and guests. Enhanced training in infection prevention and control measures is taking place as well.”
“Brokers need to be market builders from an insurance perspective,” Fisk added. They need to listen and learn from LTC clients and help insurers develop solutions that can be used to generate more capacity for this class of business.
