If you are in the aged care industry, you may have noticed an increase in premiums and greater expectations in demonstrating risk management.
Leading aged care insurer, Ansvar, recommends that when it comes to Aged Care Insurance, boards need to be highly diligent when it comes to governance of risk.
The wide scale impact of COVID-19 has significantly altered the way aged care communities are managed and scrutinised; this, combined with the hardening of the insurance market and shifts in Australia’s legislative landscape (such as the recent Aged Care Royal Commission) bring to light the urgent need to have exceptional risk management processes in place. Any mismanaged risk prevention and insurance measures could lead to severe consequences for aged care providers, including a complete closure of operations.
Ansvar CEO Warren Hutcheon, in a quote in this recent article by Ansvar, states that, “Only those organisations with mature risk management frameworks in place will be able to purchase suitable protection, at affordable premiums. Risk maturity will not just happen- risk leadership is critical…
“Boards and Executives play a key role. What we have seen across the sector is that when risk leadership is prioritized, more effective frameworks are embedded and there is a greater sense of comfort with managing key risks and improving organizational outcomes”.
The last thing you want, in these challenging times, is to lose your cover or be paying unnecessary amounts for it. To prevent this, we recommend consulting a qualified Business Insurance Broker (like us!) to discuss whether or not you may be paying too much in premiums, and what you can do to make sure you have all your ducks in a row when it comes to accessing the right protection.
Based on our experience in working with Aged Care providers, it is ideal to have risk management systems in place that cover:
- Your Aged Care Provider business as a whole
- Directors, shareholders, employees, residents/clients and other stakeholders
- Property and premises
- Cyber and IT risks
- Pandemic recovery and response protocols
- Storm and flood
- Existing insurances
Public Liability is often a key risk in the aged care industry. The majority of public liability claims will most likely relate to slips and falls; however, the frailty of many of your residents and visitors can lead to significant personal injuries. This risk increases if your aged care facility encourages swimming, gymnasium and other associated activities. The major risk faced by this sector is large scale loss of life due to fire therefore this exposure must be risk managed accordingly.
Product Liability is an exposure where food service or medical supplies such as prescription drugs are provided. With aged care providers, Professional Liability risk is considered to be high due to various services provided including medication management and patient care. Due to the sensitive nature of personal health information that may be stored, Cyber and IT risks are areas of risk that need to be managed with care.
The Business Interruption risk for aged care providers are quite high and appropriate indemnity periods need to be properly assessed. Should events turn for the worse, a large-scale residential home will take some time to find alternative premises and receive the appropriate permits required to rebuild. This can lead to a blow out in expenses related to temporary relocation of residents or permanent losses of revenue or bonds. Although COVID-19 associated risks are currently uninsurable risks, other classes of ‘interruption’ still require risk management such as fire, theft, damage and cyber attacks.
(For more background regarding COVID-19 and Business Interruption Insurance, read: COVID-19 Insurance Update: Small Businesses Take on QBE and Lloyds)
If you are an aged care provider, it is clear that having the right foundations in place when it comes to risk management is necessary for the stability and affordability of your insurance coverage. To access the right Aged Care Insurance policies and to maintain their cost effectiveness in this market, you need to ensure that you have well maintained risk management processes in place. If you would like more information or advice on this topic (and how it may relate to your situation), please don’t hesitate to contact us.
This article was written by Meghann Lions,
Account Manager at Crucial Insurance and Risk Advisors.
For further information or comment please email firstname.lastname@example.org.
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