CHICAGO (October 16, 2018) – General and professional liability claims costs for long term care providers are projected to increase by six percent in 2019, according to the findings of an analysis released today by Aon (NYSE:AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions.

The sixteenth published edition of the Aon 2018 General and Professional Liability Benchmark for Long Term Care Providers estimates ultimate loss rates, or the cost of liability for skilled nursing providers on a per-bed basis. The projected national 2019 loss rate is estimated to be $2,410. This means that a skilled nursing facility with 100 occupied beds can expect approximately $241,000 in liability expenses in 2019.

“Liability costs are an ongoing problem for our providers. Despite the fact that quality of care has improved, this report confirms that long term care providers are still absorbing high liability costs,” said Mark Parkinson, President and CEO of the American Health Care Association. “Arbitration agreements and other reform efforts can help ensure that residents and providers have a way to effectively and efficiently resolve disputes.”

“Liability costs continue to account for a significant portion of operating costs for long term care providers, and our report provides valuable insights about the drivers of these costs over time as well as projected trends,” said Kanika Vats, Associate Director and Actuary at Aon.

Statewide Results

Thirteen states were analyzed individually in the current analysis. The study showed that liability costs vary widely by state in 2018, as compared to the countrywide estimated loss rate per bed of $2,270. Of the thirteen states, liability outcomes in 2018 were the highest in West Virginia where the loss rate per bed was estimated to be $8,270. Claim severity in West Virginia is the highest among the thirteen states as well.

Arbitration

The report examines the impact of arbitration agreements on liability costs, finding that the use of arbitration has increased over time. Of the claims that closed between 2015 and 2017, 63 percent on average had an arbitration agreement in place compared to an average of 51 percent between 2008 and 2014. The report also found that on average, claims that resolve with arbitration agreements close more than two months faster.

Methodology

Twenty-nine long term care providers participated in the Aon 2018 General and Professional Liability Benchmark for Long Term Care Providers and contributed 17,400 non-zero claims in total. The exposure base comprised 185,600 long term care beds, consisting primarily of skilled nursing facility beds but also a number of independent living, assisted living, home health care and rehabilitation beds. The database represents approximately 14 percent of the beds in the United States.

More information is available at www.aon.com/ltcreport

ENDS

About Aon
Aon plc (NYSE:AON) Aon is a leading global professional services firm providing a broad range of risk, retirement and health solutions. Our 50,000 colleagues in 120 countries empower results for clients by using proprietary data and analytics to deliver insights that reduce volatility and improve performance. Aon has five specific global solution lines: Commercial Risk Solutions, Reinsurance Solutions, Retirement Solutions, Health Solutions and Data & Analytic Services.

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Media Contact:
Sadie Schwarm
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sadie.schwarm@kemperlesnik.com