Placing You First Insurance Podcast by CRC Group

Marketplace Tight for Healthcare Risks Despite New Capacity

November 12, 2021 CRC Group, Bob Allen, Rusty Hughes, Alex Gould
Placing You First Insurance Podcast by CRC Group
Marketplace Tight for Healthcare Risks Despite New Capacity
Show Notes Transcript Chapter Markers

Healthcare is a diverse industry, ranging from individual practitioners and home health nurses to ambulatory care centers and integrated systems with revenues in the billions of dollars. The risks along that spectrum also vary widely, but the insurance marketplace for healthcare organizations has been almost uniformly tight. Several insurance companies that underwrote healthcare business for decades have withdrawn from some classes, citing high loss ratios. In their place, new sources of capacity have emerged. Historically, the presence of new entrants has signaled competition and a loosening of terms, conditions, and rates. Unfortunately for insureds, that is not happening in the current marketplace. It's a challenging environment that requires retailers to approach the renewal process differently.

Featured in this Episode:

  • Bob Allen is president of Pro-Praxis, a CRC Group company providing specialty programs to large healthcare organizations, based in New York.
  • Rusty Hughes is a senior broker in the Birmingham, Alabama, office of CRC Group.
  • Alex Gould is a broker in the Birmingham, Alabama, office of CRC Group.

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Dan Wentz:

The last few years have been downright painful for healthcare COVID-19 And it's resulting panic and fear has caused the health care insurance marketplace to remain tight, even causing some carriers to leave the space. Today we talk with three CRC health care experts. Bob Allen is from Pro Praxis a CRC Group company providing specialty programs to large healthcare organizations. Rusty Hughes and Alex gold are brokers in the Birmingham Alabama office with expertise in senior living healthcare facilities and medical staffing risks. Is their relief on the way for health care? Find out next. Welcome to the placing you first podcast from CRC group. I'm your host Dan Wentz. And this podcast features news and insights from CRC group's vast knowledge base of 4300 plus associates who right in excess of $23.5 billion of premium annually and we're giving you insider access to what's happening in our company and the types of insurance we place. This is the placing you first podcast Okay, so we're joined by a brain trust of CRC group's healthcare practice. Look at this. Bob Allen is here with us from Pro practice insurance. And Bob, where are you guys out? Again? You're up in New York or something right, New Jersey,

Rusty Hughes:

where the big thing a big city but well, it's not as big as it used to be. It's a little quieter. But yeah, the big thing.

Dan Wentz:

And also from the big city, a different big city. Rusty Hughes, would you refer to? Would you refer to Birmingham Alabama is the big city rusty

Rusty Hughes:

man we used to we used to proclaim it the largest city in Alabama, but we're getting tailed by a Northern Alabama city that shall remain nameless on this podcast.

Bob Allen:

Come on.

Rusty Hughes:

That's Phil, man.

Dan Wentz:

Yeah, that's Phil's growing leaps and bounds. And also Alex here from our Alex gold from our CRC Birmingham office. So guys, what have you been up to? It's been a while since we've, we've talked. There's been a new baseball champion, right? The Atlanta Braves

Rusty Hughes:

fall that hurts your soul. I know, man. But you know, also Birmingham does claim Atlanta as the baseball home, you know what I mean? So they claim this in the

Alex Gould:

dynasty camp that's about to happen down here. So

Bob Allen:

yeah, well, when when they have what, four? Four World Series? Yeah, kids have one, maybe one out of every three World Series, but that's okay. It's, they're catching up.

Dan Wentz:

Yeah, you got to let us have it while we can. Right. So for those, for those of you that don't know, I'm also in Birmingham, Alabama too. So don't let the the remote from everyone working from home full you. All three of us, Rusty Alex and I work out the same office and Bob, of course up north. But speaking of working remotely COVID-19. It's been an issue for a really long time. And specifically when it comes to healthcare, it's been a hot topic with us. And and you know, the implications for our business. So why don't we start with Bob? Bob, what's the what's the update on COVID-19? Is this a concern? Still? I mean, are we still thinking about this? Considering it?

Bob Allen:

Yeah, you know, I'll go with really our hospital clients. So for them, they've been able to manage it. So there's backup plans for having equipment, most hospitals have gone to an approach of everyone being vaccinated from a lot of the underwriters perspective, it's not as much of an issue as it used to be. And in those handful of cases where it's excluded, I think a lot of insurance companies may be looking at it. It's gonna be an issue for a while. And I think there's an example that was actually down in Alabama, where a gentleman was seeking care beds were full. Yeah, I think he had had a stroke, and was going from facility to facility, no one could really take him he eventually ended up in Mississippi, and I think the delay in care actually, he passed away. So you know, even if you had a COVID exclusion on your policy, that's not going to prevent that lawsuit or prevent coverage for failing to provide adequate care. So you know, all those places that might be sued for that delay in treatment, or that or that denial of treatment. I think that may be where law firms start to look going forward. But for most of our hospital clients, they have coverage, there's no exclusion. I don't know. Ross, the Alex in your space in the sea living space. That was pretty, pretty hard,

Rusty Hughes:

really two sides of that story and Senior Living there's the residents point of view, and the employees point of view are still a big battle going on behind the scenes that we don't really hear a lot about in the news anymore, but majority of residents are vaccinated these days, you still have an employee base that may or may not accept the vaccine and so you have sort of that rub going on, you have carriers still unwilling, for the most part to cover the exposure? And then the third part of that is, what is this? Suppose its second wave that we've just come through, what is the claim dump going to look like in six months, eight months? And how are the carriers going to respond to that now that there's more responsibility placed on these operators because they're supposed to know how to handle it now.

Alex Gould:

And I think one more thing that to add about about COVID, within senior living facilities is with this new mandate for the employees to be vaccinated within the senior living community, I think is the effect of what it'll have on those communities. As far as staffing goes, I know one thing that was talked about it, the NIT conference very frequently was staffing concerns. And now with the mandate that has been out there, how will it affect facilities or continue to affect facilities going forward? Staffing is already concerned now the mandate is there, will it continue to cause even more concern, which may lead to more perhaps negligence of care and, and so forth? There's something else to kind of kind of keep an eye on?

Dan Wentz:

What about allied health care?

Alex Gould:

Yeah, I mean, I think the allied healthcare space just generally speaking, it's more about its pockets than anything. I mean, generally speaking with allied health care, it's not is a severe area or severe case as Senior Living. Again, it's it's more about its pockets. It's more about the the nurse staffing space and where they actually staff to hospitals in the senior living facilities, correctional medicine be in a big, really big, tough area as well. But yeah, I mean, allied health care in general, it's just it's not so much of an issue. So much or forward COVID. But again, it's just it's more about the pockets that are that are there within the the area where where it's really tough, and where the rates are, are still pretty tough there.

Bob Allen:

As we look at new programs, new, new carrier partners for our clients, allied health is probably the one space where new markets keep asking, Hey, could you get us into that space? Hey, are the rates still staying flat enough in the, in the broader allied health space is, is now the time to get in. So if it's somewhere, we keep getting these things, if it's if there's no adolescents involved, and it's not residential, like group home exposure, that would, you know, so if it's not residential, you don't have the COVID, exposure, pharmacy, stuff like that a lot of this software stuff that's in the Allied space, where we haven't seen the same sort of loss activity. There's a lot of markets sitting on the outside and not just sort of lower rated company, and I'm talking like a plus 15 companies who are sitting there waiting to get into this space. So I would say, while healthcare is a market in transition, allied health is probably the one where we're seeing the most interest for for new companies.

Dan Wentz:

Okay, so rusty, what about from a more general standpoint, we kind of touched on senior living from the COVID angle, what about generally, how is the senior living area going?

Rusty Hughes:

Well, I would say senior living if you compare it to the same time period, and if we're sitting the same month in 2020, I think you would see the generally accepted, still moving in that 30 to 40% increase range for the general segment of senior living business, that's not even taking into account difficult placements, it was a 30 to 40%, jump even through all of 2020. I think, if you compare where we sit today, to that time period, your I would call it were in transitioning market, from a hard market to a middle of the road market, meaning we're knocking that percentage increase back down to a more acceptable 10 to 15%, on average, for that same middle market, Senior Living business. Some of that is driven by new entrants, some of it is driven by the insurance of risk retention groups grabbing at that business. I think when you have those two factors at play, it causes the markets that were already entrenched in that market to heavily concentrate on their renewal books, trying to keep that new business play from the new entrants at bay. And there's just an increased pressure at a time when I'm not really sure that the time is right to be dumping as much right, as we've seen dumped over the last 12 months. So I don't know I'd be interested to know what Bob and what Ali's see from their perspective. But I would say one of the note I'd like to make about the Senior Living is particularly in the access markets. I would say that it is much less erratic than it was 12 months ago those markets have calmed down a bit not to say that the access markets are not still difficult. They're just a bit more calm than they were this time a year ago.

Alex Gould:

Yeah, I mean, I think from the access standpoint of things, Russia, we were looking at 12 months ago, where where are we gonna find some of these excess placements. So now, there's been a little bit more entrants in there slowly. And there's a few options for us to choose from, but it's still being cautious. But it is, is starting to ease up a little bit, which is good.

Rusty Hughes:

Also think that every other carrier that any carrier that's involved in this class of business right now, that has been there and been through both the ramp up to the hard market, and sort of walk through the soft market up to that time, I think every single one of them that's been in the market will tell you that they're still material development in proper last years. And I mean, as far back as 16, and 17, they're still seeing the development that a lot of the newer entrants don't have to worry with. And so I think that's why you'll see a clear difference, as we go forward to the traditional markets that have been entrenched in the space, you'll see them acting differently than the new entrants that have only been in it for the past 18 to 24 months, there'll be a clear, different chess play, coming from both of those sides of the table.

Dan Wentz:

Interesting. So let's talk about the specialties. locum tenens. First, we can hit Bob with that one.

Rusty Hughes:

I'm out on that one.

Dan Wentz:

I'm out on that one.

Rusty Hughes:

I'll let Bob

Bob Allen:

Yeah, all the all the fun stuff we've had to me. So, you know, I, I put I put locum tenens. And even correctional medicine, I think there's, there's sort of this thing that's going on where within tough classes, people, we still have markets that are willing to say, and, but the numbers dropped off drastically, and everyone has sort of well defined their appetite. So whether it's locum tenens, and as someone that's saying, you know, if there's more than 10, FTEs, I'm not going near it, versus others who have taken a completely different approach and say, Do you need fronting paper? Do they, you know, do they need claims handling for their large SAR, there are those markets that will only play in that because they feel like the losses are more predictable, you know, sort of law of large numbers. So it's not that it's the class is impossible to place, you just have to know for this client for this, for this potential insured, who's who's the best box to put them in correctional medicine. And I think we're bounded three markets seriously group app is that one of the three markets. And so it's, but it's the exact same thing, we have one market that takes the really small, we have one that that takes sort of the mid size to large maybe to markets that take midsize to large. And then there's actually I guess we also have another market that does excess on, say, the top live providers of correctional medicine. So with, you know, with these tougher classes, it's it's not impossible place, but it is getting a lot harder, especially if you have someone who's burned someone and they're one of those three spaces. So that's that's where it gets a little harder on our side.

Alex Gould:

It's it's tough in the marketplace kind of shrinks when you do place nurses in those kinds of different facilities, will makes it even tougher as well, of course, correctional being one of them. But even further from that as some of the contracts that they enter into, and some of the wording that has been required from some of those contracts. And when you start to get into some of those contracts, which is great for those entities, but to a degree, you got to be really careful because some of the wording that is is required here is can be difficult, but at the same time the marketplace really does shrink even further from there. Excess has become a big problem as well access has become an issue higher known and auto has become an issue, particularly in the access as well. The staffing space certainly has its fair share of challenges. It's it is doable, it's possible, it kind of depends on the size of them, but really depends on where they're being staffed and the types of contracts that they're entering into as well. So, but there is there's definitely some of the claims activity that we're seeing in that space as well, particularly as it's relating to correctional, particularly as it's relating to LMD exposures, and even nursing homes exposures as well. I mean, they're just, they're going to be on the hook for a lot of those claims as well, that's associated with those industries. So it's definitely a tougher area. One that we'll see some some increases that are associated with to it starting to stable out a little bit but still some tough placement. So something to kind of be aware of when you're getting into.

Dan Wentz:

Alright, let's talk about the toughest coverages. We talked about tough coverage. Let's take it another level. What about Cyber?

Alex Gould:

Yeah, we're where to begin? Yeah, 2021 it's been a it's been a challenging year. I mean, a lot of it started back in October 2020, when a few of the markets, few of the top markets really kind of started to put a pause or a change really on, on cyber really started to reevaluate the industry. In general, we've been diving into the cyberspace for over a decade. Now, it's been really easy up until that timeframe, where there was about five bits of information that I needed, and I could get a dozen quotes for you. Now, the insurance marketplace has really started to look under the hood and see what kind of security posture is in place for these, these clients. It's not a matter of having the right controls in place will grant you better premium, it's more of a matter or not that you either get coverage or you won't. Things like MFA is a big, big deal. Having endpoint detection and response in a sock in place is a big, big deal. Having backups, making sure that they're segmented and backed up daily and tested, you know, you need to make sure you go through a fire drill to make sure that if you have a ransomware event are your backups going to be are they going to work so you can get back online, and so you can serve your customers quickly. And then of course, the last thing is, is in training is training of your employees. Employees are still the number one threat to a cyber security event, teaching your your employees, what things to look out for what to be aware of to avoid any of those kinds of issues. I know we haven't met CRC where we go through some training and from time to time we get a random email that we need to that's kind of our test whether or not it's a phishing, scam or not. But those in particular, there's a few other items, but those particular are really the big, big things that underwriters are looking for. And if you miss out on one, it's a problem. So it's very key when when agents are talking to insurance, whether it's the CEO or the CFO is making sure that the the technical team, the IT team security team, whether they have a CISOs in place or not review those applications, because it's really important to yes or no to one of the questions is very important and sometimes could result in situations where you very well cannot even get any coverage in place. So it's it's a challenge. And I think it will believe it or not 2022 is going to be even more challenging as we go into the new year.

Dan Wentz:

For sure. And another tough area sexual misconduct.

Bob Allen:

So while you're looking at me,

Dan Wentz:

Bob, you want to take this one, you have some knowledge on this one.

Rusty Hughes:

That's tied back for the for the Yankees.

Bob Allen:

To say, sorry, no, that's good. That's good. Um, yeah, so for us, that's been our challenge is, especially when you start getting into foster care risk adoption agencies. It's it's just getting almost uninsurable. There's been in the news over the course of the past, say, five to 10 years. Some really nasty events that academic medical centers, so there was Dr. Nasser and Michigan State University. There is Dr. Levy at Johns Hopkins. I mean, these are nine figure settlements. And USC is another one. And and so when you look at some of some of these cases, you sit there and you know, not just our carrier partners, but their reinsurers as well. They're looking at this and saying, how do you underwrite it? And, you know, it's how do you underwrite humans? You know, it's not quite cyber, you know, but even cyber people are gonna make mistakes, there are going to be breaches, and there's going to be some really bad people in the world. And there's gonna be some really horrific events. But I can't tell you how to underwrite each and every individual and each and every employee to guarantee that I don't have a bad app. Why there

Dan Wentz:

are rusty, why don't you tell us a little bit about how using a CRC producer can can help you obviously, these guys are super knowledgeable, right? We've figured that out from this conversation. But What advantages does a CRC producer either you guys it CRC health care or pro practice with Bob Allen, what what kind of advantages do you offer? Well,

Rusty Hughes:

I think two things so support from our competition. And that is exactly what we're doing here. We're very collaborative group of folks. Our healthcare group shares information. We're in constant communication about what market conditions, what's changing what's new, what we need to be on the lookout for, how can we advise our clients on what to expect in the coming market? And then secondly, I think the biggest advantage that we have and why people should use us is we have the best in house programs in the industry without question second to none. And the people responsible for running those programs and getting them out to the market are the best in the business and the healthcare industry. So that's what has always kept us out in front of the competitors is our in house programs, our in house capabilities, the ability to be seen in the market as experts because of the information that we have behind the scenes. You know, that's my opinion, but a pretty strong

Dan Wentz:

Well great, thank you guys very much. Awesome podcast as always, and I hope to check in with you again here soon to figure out what uh, you know, what happens as the year goes on. So, or next year, I guess as we get into 2022. Bob, Rusty Alex, thanks, guys. Appreciate it.

Is Covid-19 still a concern?
Update on Allied Healthcare
Senior Living
Specialty Areas
Cyber Coverage
Sexual Misconduct
What advantage do CRC producers have?