Nursing Home RRGs Form For First Time Since LRRA Passage

For the first time since passage of the Liability Risk Retention Act 17 years ago, risk retention groups providing liability coverages to owners or operators of long-term care facilities, including nursing homes, assisted living facilities and similar eldercare arrangements, have begun to form.

Prior to 2003, no RRGs insuring liability exposures for these types of facilities were established.

By contrast, in the first seven months of 2003, five RRGs have formed to provide liability coverages in this business area, with more on the horizon.

The primary reason for these formations stems from skyrocketing premium and lack of availability of liability coverages.

According to an industry survey, between the years 1995 to 2001 the average annual premium increased from $250 per occupied skilled nursing bed to $2,360. By contrast, the newly formed RRGs are able to charge much lower per-bed premiums, in the range of $800 per bed.

With excellent loss ratios, organizers of these new RRGs, most of which insure long-term care facilities in rural areas, report they feel penalized by the rate hikes, which bear little or no relation to their claims experience.

Several states serve as the domiciles for these new RRGs, including Vermont, South Carolina, Florida and Montana. Nursing homes insured by the RRGs are located in various states, including Florida, Mississippi, Pennsylvania and Ohio.

Karen Cutts is managing editor and publisher of the “Risk Retention Reporter,” a monthly newsletter based in Pasadena, Calif., which she founded shortly after passage of the 1986 Liability Risk Retention Act.

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 18, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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Nursing Home RRGs Form For First Time Since LRRA Passage

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