Canadian Underwriter

How liability insurers will react to military report on long-term care homes

June 2, 2020   by Greg Meckbach

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A recently military report on some Canadian long-term care facilities will change the way liability coverage is underwritten and could even discourage some insurers from staying in the market, a managing general agent suggests.

“I think you will probably see an exodus of some capacity from the [nursing homes and long-term care homes liability] class by those carriers who were just dipping their toes in, or perhaps were not fully committed to the class,” said Stephen Stewart, president and CEO of Toronto-based Stewart Specialty Risk Underwriting Ltd., in an interview Tuesday. “This will probably harden rates.”

As a result of the COVID-19 pandemic, hundreds of members of the Canadian Armed Forces have been working more than a month to help maintain staffing levels and to help with infection control in some long-term care facilities.

The recent report from the military on some Ontario homes found people left in filth for weeks; others left on the floor where they had fallen; cockroach infestations; people choking while being improperly fed; patients with brutal pressure sores; and seniors pleading for help for hours to no avail, the Canadian Press reported. The report was made public by Ontario Premier Doug Ford, who described the allegations as “gut-wrenching,” CP reported.

“There is a general understanding that many of these places are not run very well,” Stewart said Tuesday in an interview. “Now you have some documentary evidence of that, and I think insurers are probably going to look at the class as a whole more carefully, and probably wonder whether this is a systemic issue with the entire class. That is going to have an effect on how this stuff is underwritten.”

Going forward, underwriting liability risk for nursing homes and long-term care facilities will be far more “granular,” Stewart suggests.

The May 14 report from the commander of the army’s Toronto-based Fourth Canadian Division to the commander of the Canadian Joint Operations Command is significant for insurers defending liability claims, suggested Pino Cianfarani, Toronto-based defence class actions lawyer with Lerners LLP.

“It is not evidence, per se, but it certainly gives claimants and their lawyers a very detailed road map for the issues they should be pursuing, and guidance on, for example, what records they should be requesting and what to dig for and what questions to ask,” Cianfarani said in an interview.

“We have had similar horror stories in the U.S. and that story is not getting any better,” said Hank Watkins, New York City -based regional director and president, America’s at Lloyd’s.

It is possible that the conditions found by the Canadian military were not caused by the pandemic, Watkins said in an interview.

“I don’t think you go from providing decent care to worse care in a few months,” said Watkins. “There are a whole range of coverages that might apply in that case. I am not sure how you would attribute those awful conditions to COVID-19. That is up to investigators and attorneys to figure out.”

The Canadian military report could have a number of effects, said insurance defence lawyer Ari Krajden, partner with Kawaguchi Krajden LLP.

“If the operator’s policy of insurance is up for renewal, the facility is likely to be red-flagged by the underwriter who will drastically increase rates based on their knowledge of deficiencies/risks at the facility,” said Krajden.

Both Cianfarani and Krajden agree that lawsuits against long-term care homes are unlikely to allege economic losses.

Instead, they would likely be comprised mainly of claims for pain and suffering, punitive damages, and subrogated claims from the Ontario Health Insurance Plan, said Krajden.

“Claims are being made against facilities by individuals that are residents of long term care facilities who are presumably elderly and/or not well enough to care for themselves independently,” Krajden told Canadian Underwriter. “Therefore income loss claims would not have a factual basis to them. Furthermore, most of these individuals already have significant care needs and accordingly a claim for future care costs could only be framed as a claim for additional care costs that would not have been required but for the incident.”

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