A national trend that began two years ago of huge increases in liability insurance for nursing homes has finally reached the Rhode Island marketplace, industry representatives said.
"It’s gotten totally out of control," said Al Santos, executive director of the Rhode Island Health Care Association, a trade group for the state’s nursing home industry. "We’re seeing rates double and triple, and it’s gotten to the point where some of these homes can’t afford coverage."
The situation is much worse in Florida, where an onslaught of claims against nursing homes in recent years has led to enormous spikes in liability premiums. The increases forced nearly 20 percent of nursing homes there to drop coverage altogether, according to the Florida Policy Exchange Center on Aging at the University of South Florida. The situation prompted Florida’s legislature to pass a bill last year requiring all nursing homes to carry liability insurance.
Although rates still aren’t as high in Rhode Island compared to other states, there’s little doubt the trend has arrived here.
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"Two years ago, (nursing homes) were paying $80 to $100 a bed for liability insurance," said Louis R. Brown, an independent agent at Mastors & Servant Ltd. who has about 15 nursing-home clients. "Now it’s not uncommon for insurance to cost $500 a bed."
Brown said liability-insurance rates were kept in check throughout the 1990s. But beginning about two years ago, claims against nursing homes began to rise, and insurers reacted by jacking up rates. And nationwide, the problem has been exacerbated by the Sept. 11 terrorist attacks, which reportedly could cost insurance companies $70 billion or more.
Brown said one nursing-home client saw its annual cost for liability insurance grow from $55,000 two years ago to $88,000 last year. The latest quote: $198,000. Brown said the example is "consistent with what’s going on" in the industry.
Angelo Rotella, president of the 220-bed Berkshire Place Nursing Home in Providence and the 126-bed Friendly Home in Woonsocket, said he’s lucky. His rate increases have been kept to 10 or 12 percent because he hasn’t had any claims and his agent "has been working like crazy" to keep premiums under wraps.
Rotella, who serves as secretary for the American Health Care Association, a Washington, D.C.-based trade group representing nursing homes, said the problem with rising liability premiums nationally is being made worse by a growing number of insurers who are shying away from writing nursing-home business.
"Insurance companies have gotten very skittish when it comes to nursing homes," Rotella said. "We’re seeing a lot of (insurers) pulling out of the market."
