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New analysis shows liability costs continue to rise for long term care facilities
Kentucky remains the highest cost state, and Texas has the lowest loss rate in annual AHCA/Aon study

Washington, D.C. – Liability costs for long term care providers are expected to increase by five percent and claims frequency is also expected to rise, according to an analysis released today by the American Health Care Association (AHCA) and Aon Global Risk Consulting, the risk consulting business of  Aon plc (NYSE:AON).

The 2014 Long Term Care General Liability and Professional Liability Actuarial Analysis provides estimates of loss rates, or the cost of liability to the beds that care providers operate. The projected national 2015 loss rate, which is a combination of claim severity and frequency, is $2,030 per occupied bed. This means that an operator with 100 beds can expect $203,000 in liability expenses in 2015.

“The need for long term and post-acute care is growing, and increasing liability costs impede our ability to serve those we care for and their families,” said Mark Parkinson, AHCA President and CEO. “This report underscores the importance of delivering solutions so we can continue to provide the highest quality care and improve lives.”

“Once again, we continue to see claims frequency rates grow nationally. Kentucky remains the highest cost state in our annual study, with a projected loss rate of $9,220 per occupied bed. This implies that a nursing home operating 100 beds in the state should set aside $922,000 annually for liability costs. This contrasts sharply with Texas, where the same operator should only expect to fund $32,000 annually,” added Christian Coleianne, associate director and actuary from Aon Global Risk Consulting, who produced the report.

Kentucky’s state constitution prohibits limits on tort recoveries and there are no statutes concerning qualification of expert witnesses, certificates of merit, pre-trial alternative dispute resolution or limits on attorney’s fees. Texas, on the other hand, experienced dramatic loss rate reductions following constitutionally enacted tort reform in 2003. These reductions in loss rates have been sustained in the years following the legislation.

Seventeen states participated in this annual report, which also highlights an aggregate country-wide projection.

Methodology
Approximately 13,700 individual non-zero claims from long term care facilities were aggregated. The 34 providers represented in the national study operate approximately 230,000 long term care beds, consisting of skilled nursing facility beds and a number of independent living, assisted living, home health care and rehabilitation beds. They represent approximately 17 percent of these beds in the United States, and six of the 10 largest operators in the country.

Note to editors: An abstract of the report and graphics illustrating results from the 2014 Aon Long Term Care General Liability and Professional Liability Actuarial Analysis are available upon request. To access the report, visit www.ahca.org.

About AHCA/NCAL
The American Health Care Association and National Center for Assisted Living (AHCA/NCAL) represent more than 12,000 non-profit and proprietary skilled nursing centers, assisted living communities, sub-acute centers and homes for individuals with intellectual and development disabilities. By delivering solutions for quality care, AHCA/NCAL aims to improve the lives of the millions of frail, elderly and individuals with disabilities who receive long term or post-acute care in our member facilities each day. For more information, please visit www.ahca.org or www.ncal.org.

About Aon
Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world’s best broker, best insurance intermediary, best reinsurance intermediary, best captives manager, and best employee benefits consulting firm by multiple industry sources. Visit aon.com for more information on Aon and aon.com/manchesterunited to learn about Aon’s global partnership with Manchester United.

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Media Contact:
Meg Connolly
312-459-6362
meg.connolly@kemperlesnik.com 

 

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