Long Term Care Liability Projected to Continue for Foreseeable Future

The cost of long term care liability has been increasing steadily since 2005 and is projected to continue on an upward trend through 2013 as loss rates and the cost of accident claims grow, an analysis conducted by Aon Global Risk Consulting finds.

Long term care loss rates will continue to increase by 4% annually resulting in a projected general and professional liability (GP/PL) loss rate of of $1,540 per bed in 2013, according to Aon’s 2012 Long Term Care General Liability and Professional Liability Actuarial Analysis published in partnership with American Health Care Association.

This increase in annual loss rate per occupied bed has been a continuing trend for the industry since 2009 according to Aon.


Also on the rise, Aon finds, is the average size of monetary claims. The severity of claims has risen steadily since at least 2005 when the average amount per claim was $109,000. Aon reports a cost of $168,000 per claim for the 2012 and projects an average of $175,000 in 2013.

The analysis uses figures from an aggregated database of long term care liability losses and allocated loss adjustment expenses according to reports from 37 long term care providers. The aggregation includes 19,500 individual non-zero claims from long term facilities and represents 280,000 long term care beds mainly in skilled nursing facilities but also includes independent living, assisted living, home health care, and rehabilitation beds.

Long term care loss rates are also broken down by state. Kentucky possess the highest long term loss rate for 2012 at $5,530 per bed, and Texas the lowest at $330 per bed, according to Aon’s research.


The analysis also cites as a key finding that the frequency of long term care is neither on the rise nor decreasing.

View the full analysis here

Written by Erin Hegarty

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