Commercial insurance costs for nursing homes have been unpredictable and in some cases spiking as high as 40% regardless of loss history or risk profile, but stability is on the horizon.

Still, nursing homes face high deductibles and fewer available carriers, while also being required to provide more information in order to be insured. Cybersecurity insurance, meanwhile, has shifted from an optional add-on to being essential in the wake of high-profile health care cyberattacks.

Insurance cost increases have been all over the map for Health Dimensions Group (HDG), said Amber Rogotzke, HDG’s president and principal. This is especially true on their consulting side, with different nursing home owners. Rogotzke has seen anywhere between 5% and 40% increases in cost.

While variations in cost changes are moving toward more stability, operators in the Mideast have been hit hard in the last several years, Rogotzke said. HDG provides management services to 52 facilities across nine states and offers consulting services to more than 800 clients across the country.

“Things are moving to a place of more stabilization, but still really unmanageable. Large increases are happening with most entities, most communities that don’t have any sort of loss history, along with higher rising deductibles,” said Rogotzke. “It’s a hard environment to be in.”

The best advice Rogotzke has for operators in such an environment is to make sure whoever is managing risk really knows and understands operations. Educate staff constantly, she said. Operational leaders need to know what’s included in insurance policies since carriers are getting very specific on exclusions.

Moreover, having a strategic broker who knows a provider’s operations in and out ensures the best coverage.

“Why are you a good operator? Why do you deserve good rates? What are we doing from a risk management perspective? [Brokers] can help share your story,” said Rogotzke.

Rogotzke spoke about risk in the sector alongside Jacqueline Genesio, general counsel for Washington-based Vertical Health Services during a Skilled Nursing News webinar.

Less insurance carriers, more homework

Coupled with higher costs and deductibles, there are also less carriers in the sector, with many leaving. And this is putting pressure on existing insurance carriers catering to the nursing home sector while also removing competition – leading to higher insurance rates.

“We have had clients that have come to us looking for assistance, because they received, you know, 40% to 60% increases based on their last history. And, the application process and getting insured is becoming harder and harder,” noted Rogotzke.

Insurance carriers are requiring operators to provide more and more statistics, including certain staffing levels, extensive information on how an operator runs their business. This type of extra homework isn’t new to the industry, with finance experts saying similar data is needed for mergers and acquisitions in skilled nursing, as well as criteria for financing.

Another consideration: operators with a recent acquisition of an older building could face surprise property insurance costs, if the insurance carrier believes there to be hidden hazards upon acquisition, Genesio added.

“These hidden hazards are all what insurance carriers must assume are there, like asbestos, mold, and other hazardous substances. These things just drive up the premiums,” said Genesio.

Increasing prevalence of cyber security insurance

Genesio echoed Rogotzke’s sentiments on added data for insurance coverage, adding that the “dramatic” increase has happened over the past several years. Carriers are asking not just about best practices but proof of such practices in action, especially when it comes to cyber security policies.

“You should expect that you are going to undergo their evaluation, and they’re going to score you and recommend areas for improvement,” said Genesio. “Cyber [policies] years ago was this little add on that people would place, and now it is absolutely essential.”

Health care cyber attacks have been an ever-present threat for providers, but the most recent attacks on Change Healthcare in February have had ripple effects on the industry, prompting lobbying groups and federal agencies to action.

Cyber attacks have increased dramatically over the last several years going back to the beginning of the pandemic and the move toward a more virtual world.

The amount of cybersecurity claims are “off the charts,” Rogotzke added. Still, some ownership groups out there believe they don’t need them, and so it’s an education process for a lot of nursing home leadership, she said.

“[Hackers are] specifically targeting health care. They’re targeting seniors and the senior population, and we’re right in the middle of it,” said Rogotzke. “Make sure that you have really good cyber coverage, which, again, has all of these parameters, just to even get cyber coverage.”

An educated operator that knows how important cyber coverage is, and knows what rigorous requirements are needed for underwriting is crucial. Such requirements have increased “tenfold” compared to what was required just a couple years ago, she said.