State of the senior living industry

The total market capitalization of the senior living industry, including housing and care facilities, is estimated to be approximately $475 billion in the United States alone, according to the nonprofit National Investment Center, which connects investors and providers with data analytics to support access and choice for America’s seniors. While this estimate from the close of 2019 points to a healthy industry, it is also an industry facing the headwinds of rising loss severity, social inflation, and an active plaintiffs’ bar, all of which present threats to net operating income and the potential for reduced market capacity.

COVID-19 complicated an already-hardening market as the elderly proved highly susceptible to the disease and, tragically, the death toll soared. As a result, insurance carriers pulled back, sharply increasing rates and retentions, reducing limits, and adding new exclusions. Lockton Vice President and Health Care Practice leader Elizabeth Spink notes that the COVID-19 concern extends beyond pricing to the specter of increased deductibles and reduced capacity. “Carriers are looking at potential mass litigation and assessing how they can price for the exposure,” Spink says. “Exclusions are changing with particular emphasis around communicable disease and punitive damages.”

In this environment, it is not surprising that underwriters are asking more questions, and that risk quality has become an increasingly important factor in simply getting terms. Progress will require a steady blend of market engagement, risk mitigation, and strategic planning. This Lockton whitepaper is intended to assist those in the senior living industry in better understanding common risk factors and how the industry’s risk may be effectively mitigated and transferred.

Read the full Senior Living whitepaper here (opens a new window). Download paper (opens a new window)