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Insurance rates skyrocket in extreme weather areas, straining providers’ finances
Property insurance rates continue to be a source of unpredictability and financial stress for long-term care providers across the country, but especially in areas vulnerable to extreme weather. A particularly vulnerable area is Florida, where premiums have increased by 125% in the last five years.
This 25% annual average underscores the unequal burden faced by long-term care providers in areas of the country at risk of climate emergencies such as hurricanes and wildfires.
For example, in Florida, the second oldest state in the country, on average, premiums have increased 27% in 2023 alone, according to published numbers by Bloomberg Monday. This far exceeded the national average of just 6%.
While still trending upward, rate increases have generally stabilized significantly since the end of the COVID-19 pandemic. The national average of 6% is consistent with an average increase of zero to 10% predicted in an analysis of the beginning of May released by Willis Towers Watson.
This WTW analysis, however, predicts significantly higher premium increases in areas where facilities may be exposed to catastrophic losses or already have a history of costly insurance claims. The report estimated annual increases ranging from 10% to 20% in these areas.
Already facing the same staffing and reimbursement funding challenges as other U.S. providers, several Florida senior care operators the alarm sounded about the additional burden of skyrocketing insurance premiums.
The Bloomberg report noted that an average of about 140 nursing homes and assisted living facilities, the overwhelming percentage of them assisted living, have closed in Florida in each of the past five years. Nursing home closures in the state are comparatively rare, according to Kristen Knapp, senior director of strategy and communications for the Florida Health Care Association.
Florida’s Certificate of Need process has limited closures in the state, she told McKnight’s Long-Term Care News on Monday. Only 17 closures occurred since 2018. Two of these facilities were closed due to severe hurricane damage in 2018.
However, rising premiums continue to plague the region’s providers as nursing homes are forced to adapt to increasingly stormy weather conditions – both literal and regulatory.
Studies carried out in recent years have highlighted that installations in different regions of the country are often insufficiently prepared for natural disasters such as hurricanes and wildfires that have been worsened by climate change. In the Atlantic and Gulf Coast regions, for example, about 30% had deficiencies in emergency preparedness in 2023.