Aon Risk Solutions’ “2011 Long Term Care General Liability and Professional Liability Actuarial Analysis” cited a 4% annual increase in the average claim size as responsible for the growth of long-term care liability costs. Nationwide, the severity of liability claims increased steadily from $125,000 in 2005 to $153,000 in 2010. In 2011, claims severity is projected to reach $159,000.
“For the long-term care profession, controlling liability costs is necessary if we are to make do with dwindling resources for patient care and adequate staffing,” says Mark Parkinson, president and CEO of AHCA.
To help gauge the level of risk facing long-term care providers, the yearly analysis measures the severity and frequency of liability claims and tracks the loss rate (liability cost) as a percentage of the Medicaid per diem reimbursement rate. The study finds that while claim severity has grown, liability claims frequency has decreased from 1.07% in 2003 to 0.91% in 2010. However, the increase in the size of claims outweighs the decrease in claim incidence.
Aon Global Risk Consulting’s associate director and actuary Christian Coleianne, who coauthored the study, says tort reform legislation is helpful but may not be enough to help control liability costs.
“Limiting non-economic damage awards alone may not be enough to control liability costs,” she says. “California caps non-economic damage awards at $250,000, yet liability costs in the state remain among the highest in our study — largely due to provisions in California’s Elder and Dependent Adult Civil Protection Act that run counter to the long-standing MICRA caps on non-economic damages. Tort reform laws have been circumvented in West Virginia as well, where liability costs are the highest in our study.”
— Bill Kenealy writes for Insurance Networking News, a SourceMedia publication.
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