Florida Elderly Services Crunch Could Spur Demand for Liability Insurance

Jul 1, 2008

Insurance Journal--July 1, 2008

Florida faces a crisis in meeting the demand for aging services over the next 22 years as the population aged 85 and older is forecast to grow by 126 percent. This will require 15,000 more skilled nursing beds at a time when there is expected to be a severe shortage of nurses, according to a just-published study of the state’s future aging service needs.

In addition, dramatic growth in home care and assisted living, as a substitute for care in skilled nursing facilities, may increase professional and general liability risks that will create a need for increased liability insurance in an uncertain market.

These conclusions are from a demographic and workforce study, Mapping the Future — Estimating Florida Aging Services Needs 2008 to 2030, which analyzes aging care demand, care-giver availability, and senior living environments. It was conducted by the research, consulting, and accounting firm, LarsonAllen, for Ponce de Leon LTC RRG, Inc., a provider of general and professional liability insurance to long-term care facilities in Florida.

"The challenges facing the state of Florida in planning and providing for the needs of those aged 65 and older are daunting," said Nancy Rehkamp, principal in LarsonAllen. "Florida must grapple with these changes sooner and with greater speed at a time when the economic outlook is less optimistic," she cautioned.

"As the number of seniors choosing home healthcare or assisted living grows, skilled nursing facilities will experience shorter stays and be exposed to more risks that require liability coverage," said Sanford "Sandy" Elsass, president and underwriting manager, Ponce de Leon Risk Retention Group, the study sponsor.

Elsass said risk retention groups owned by facilities and professional healthcare workers, will provide a stable market to fill this need.

The study identifies a number of other factors that are likely to challenge providers of long-term care:

Despite the growing aging population, hospital use rates will continue to decline with a resulting decrease in demand for post-hospitalization
skilled nursing, home care, and hospice services.

Reduced hospital use rates will be offset by aging population growth
resulting in the need for some 15,000 more nursing home beds over the next 22 years.

Availability of home-care givers, including family and other informal
providers, is expected to decline 41 percent by 2030, leaving 420,000 more seniors 85 years and older at risk of requiring assisted living or other formal services.

Growth in home and community-based services is expected to escalate as more seniors opt to remain in their own homes or choose assisted living facilities instead of skilled nursing.

A shortage in nurses may mean that more care will have to be provided in institutional settings where the limited number of trained staff can be deployed more efficiently.

Ponce de Leon LTC RRG, Inc.