How COVID-19 redefined the relationship between the care sector and its insurers  

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Specialist care sector insurer Markel UK has published a White Paper examining the impact of the COVID-19 pandemic in the care sector, the response from the insurance sector and how it will shape the future. Wendy Cotton, Social Welfare Line Manager at Markel UK, examines the findings and explains why insurers and brokers will be offering more than simply a product that reacts to a claim. 

The UK care industry has undergone a period that could almost be described as a ‘Black Swan’ event, something that those in the sector could never have imagined. 

Pandemic threat has always been in the insurance industry’s thinking, but the speed and scale of COVID-19 infections and the vulnerability of those in the care industry placed this sector at the heart of the situation.  

The aim of Markel’s white paper – ‘Care and insurance COVID-19 lessons will redefine care sector’s insurance and risk needs as uncertainty continues’ – sought to identify the lessons learned and the challenges ahead for the industry. 

For the care industry, the COVID-19 pandemic created a perfect storm of uncertainty.  

As the vaccine roll out continues and the UK Government looks to fully ease restrictions for care home residents, the insurance industry will play an important part of the care sector’s efforts to navigate the new normal. However, the ongoing debate over the quarantine restrictions for those residing in – and visiting – care homes and those returning to care homes from hospital stays, highlights that the issues are still far from over.  

Care organisations have been on the front line of Britain’s fight against the pandemic and in supporting society’s most vulnerable. The desire to meet the needs of some of the country’s most at-risk members of the population has seen staff and businesses placed under unprecedented strain, caught in the middle of the Government’s strategy to restrict the spread of the virus and ease pressure on the NHS.  

Overcoming challenges

While its response has been one of the true shining lights in what has been a dark year, as the spread of the virus recedes, the care sector now faces a reaction from regulators who are not only redrawing the regulatory landscape but who are adopting a stringent approach to any perceived failings as inspections resume.  

When COVID-19 hit the UK, it did so as the care sector continued in a period of transition, as the independent, not-for-profit and charity organisations continued the ongoing process of assuming many roles and responsibilities that had, in the past, been the remit of local authorities.  

To protect residents, care homes went into their own version of lockdown. Families and friends were not allowed to visit people and there were questions about the impact on people’s human rights and the legality of those restrictions. The toll of the lack of human contact on residents was national news. Some people deteriorated rapidly  ̶  there were extreme examples where some families attempted to remove relatives, who may have been subject to deprivation of liberty safeguards. Providers therefore needed to be agile, use  technology where appropriate and think outside the box. 

The pandemic left the sector not only challenged to implement rigorous new procedures to protect residents, clients and staff, but also facing a shortage of PPE and a significant price increase for those items that were available. 

As the UK moved into the first of the three major lockdowns in the space of a year, the biggest issue for providers was the lack of guidance from the authorities. Guidance often came too late and only after the spread of the virus in a wide range of care settings became apparent.  

Gaps in guidance

It was the lack of guidance that many believe left the sector behind the curve in its ability to tackle the impact of the virus. People issues were also significant, with companies and organisations having to deal with staff and families who were seeking reassurance and guidance that was not available. Regulators were themselves forced to scale back their operations while the threat of the virus was understood. 

As the sector looked to its insurers, Markel’s White Paper has found that the response from the industry has been mixed.  

When it came to the response of the insurance sector, the National Care Forum (NCF) said there were notable differences between the home care and care homes market. ‘Key issues for home care providers that were noted were an increase to premiums and the removal of a couple of insurance providers available in the market,’ the NCF said. ‘The care homes market, however, raised a number of significant issues. The insurance market for care homes, though relatively small, has tightened and continues to tighten.’  

Providers reported that some insurers said they would not take on new care home business and they were not being specific about what needed to change in order for them to start doing so.  

There were reports of some insurers offering an extremely low level of public liability, described as ‘unrealistic’ by the NCF, which added such terms would mean ‘that care homes will essentially have no meaningful public liability cover for any claims associated with COVID-19.’ 

There is no doubt that COVID-19 triggered a withdrawal of insurance capacity and there is little sign of any return, putting further pressure on brokers when seeking markets with whom to place their clients’ risks.  

Tough decisions ahead 

There have been harsh lessons for those in the care sector, as the uncertainty has prompted the need for tough decisions. What has become clear is that, if the care sector had not fully understood the specialist nature of the cover required by care organisations, it was starkly illustrated by the events of the past year.  

As organisations looked to their insurers for far more support than simply at the point of a claim, the discussions have highlighted the way in which the client is seeking more from their risk carriers. It is likely that the future relationships between care providers and their insurers will change significantly as the sector evolves into a new way of operating once the world has learned to manage the threat of COVID-19. 

The effects on the care industry will be long lasting and the same can be said for the insurers that cover the sector. The pandemic has created a greater need for appropriate insurance cover, risk management and legal support than ever before, but questions remain for the future. Brokers will need to fully understand their clients’ changing risk profiles, while insurers will need to wrestle with the ability to shape their cover to meet the care sector’s needs. 

The sector is navigating these new uncertainties at a time when the demand for its expertise and services has never been greater, and this is predicted to increase. 

If the adult social care workforce grows proportionally to the projected number of people aged 65 and over in the population, then the number of adult social care jobs will increase by 32% (520,000 jobs) to around 2.17 million jobs by 2035. 

Working in partnership

Markel’s White Paper concluded that the future is likely to be defined by the way in which the insurer and its broker partners can work with their clients to adapt the products and services they provide to meet the changes to the sector’s risk profile and insurance requirements.  

COVID-19, and the lessons learned, will undoubtedly change the way in which the sector operates. It will redefine the regulatory approach and see the emergence of new risks. It will require a new relationship between insurer, broker and the client.  

A different tactic is now needed – driven by the demands of operators across the care industry – for the relationship with the insurer to go beyond the risks they need to mitigate.  

Advice for providers

  • Review and document your risk management procedures and processes. By doing this, the insurer will see you as a well-managed organisation that is likely to have a more attractive risk profile when they are reviewing your application. 
  • Consider purchasing your cover from a specialist insurer – they will have underwriters with deep knowledge of your sector and specialist wording to ensure you are properly covered. 
  • Discuss with your broker/insurer the specific covers that are relevant to your organisation – for example, are you particularly exposed to abuse claims and do you feel insurance cover for this issue would help? 
  • Check the added-value benefits your insurer is offering as part of their package and take a view on whether these can help you. For example, would free legal advice be valuable? Will they offer regulatory guidance or risk-management support and training? 

 To download a copy of Markel UK’s White Paper, visit the Markel UK website:  

Wendy CottonWendy Cotton is the Social Welfare Line Manager at Markel UK. 

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