The role of managing general underwriters (MGUs) in the senior living insurance market
How managing general underwriters (MGUs) are rising to meet the needs of the senior living insurance market
Americans are getting older. In fact, recent data from the U.S. Census Bureau1 reveals that in 2020, nearly 17% of the population was over age 65, and that percentage is set to rise even more in the decades to come.
With an ever-aging population comes a growing need for senior living facilities.
“The AARP2 has found that more than 10,000 Americans are turning 65 every day,” notes David Catanuto, Vice President and Senior Living Underwriting Program Manager at Pro-Praxis Insurance (“Propraxis”). “It’s estimated that in 25 years, there will be 88 million elderly Americans, creating an enormous need for more senior living facilities and more robust home care.”
The challenging landscape of senior living
This surging demand comes at a taxing time for the senior living industry, which is still recovering in the aftermath of the pandemic when many facilities were caught off guard and tragically lost residents to COVID-19.
“One of our biggest challenges, as underwriters, is seeing past adverse opinions that have been formed about elder care facilities, to provide our product to many well-meaning operators,” Catanuto explains. “The industry has been stigmatized, to some extent.”
This issue is compounding the effects of a long-term staffing issue at senior care facilities that pre-dates the pandemic. According to a 2022 study by the American Health Care Association3, 87% of nursing homes are facing moderate to high staffing shortages, and a staggering 98% of all nursing homes in the survey are struggling to hire staff.
“The staffing problem is real,” says Catanuto, whose MGU has been working in the senior living space for the past 12 years.
The staffing shortage, in turn, can lead facilities to reduce the number of residents they can accept. In the worst cases, some nursing homes are forced to close because they simply can’t find nurses and care workers to operate them.
On top of these issues, many older senior living facilities are struggling to compete with newly constructed ones that attract residents with their updated features and amenities. Some are closing down, adding to the complexity of an already fraught industry.
Managing general underwriters (MGUs) ready to partner on solutions
In spite of these challenges, Catanuto is optimistic about opportunities in the market and the value Pro-Praxis can offer to senior living facilities. With demand poised to skyrocket, he knows that managing general underwriters (MGUs) will play a critical role in the future of the industry.
“Senior living operators need quality underwriting, and we have a very experienced team that has been in this segment for a long time,” he says. “We understand the business and partner with brokers and agents who do this kind of work all day, every day.”
That’s good news for operators as senior living occupancy levels begin to increase and they prepare for the rise in demand an aging population will bring.
Putting risk management at the forefront of senior living
Risk management plays a big role in helping senior living operators succeed in a challenging market, and data is at the heart of this effort.
“At Pro-Praxis, we have over a dozen years of claims and underwriting data, and we can look at our book of business in a microscopic way,” notes Catanuto. “This is helping us with modeling risk, projecting future losses and pricing new business.”
It’s also helping them tailor their risk management offerings to tackle areas with the biggest losses.
“For example, the operators having the most difficulty with claims losses and lawsuits could be those still struggling with documentation on how they care for their residents,” he explains.
Pro-Praxis’s risk management team can help identify gaps in charting or other medical administrative procedures to help operators improve protocols to create better outcomes, both for residents and for the operator’s bottom line.
Risk management can also pinpoint other weak spots for operators, such as less-than-ideal background check policies, and help them put together a best practice-based approach for vetting staff.
“We do a lot of creative risk management with our vendor partner,” says Catanuto.
Over the past four years, the team at Pro-Praxis has created brand-new risk management surveys and inspection reports to help meet the evolving needs of insureds. They’ve also built products to address emerging trends in senior living, such as acquisitions and leadership turnover.
“The market has changed over the years, but my team has been consistent,” he says. “Because of our long-term expertise in senior living, we are able to be very niche-specific.”
Providing personalized solutions for senior living insurance
Due to the complexities of the senior living insurance market, a personalized approach continues to be the gold standard.
“We are never going to be an industry where you have an operator go to a website, punch in an address and have software generate a quote,” Catanuto says. “You have to have humans evaluating the data, and we have to be very good at what we are doing.”
“Pro-Praxis is a best-in-class senior living MGU with a focus on specialized underwriting expertise, tailored and sustainable risk management solutions, and proactive claim resolution,” says Michael Walder, Vice President of Healthcare Programs at Nationwide.
When an operator and an MGU enjoy a strong relationship, as Catanuto’s team does with its clients, senior living operators will have the advantage they need to succeed in an industry with narrow profit margins and little room for error.
“I am hopeful that we as a society can go in the right direction to care for our population as it continues to age,” says Catanuto. “It’s a very pivotal time in our nation’s history in this regard, and we are committed to continuing to evolve to serve this important market.”
[1] https://www.census.gov/library/visualizations/interactive/how-has-our-nations-population-changed.html
[2] https://www.aarpinternational.org/initiatives/aging-readiness-competitiveness-arc/united-states#:~:text=Every%20day%20in%20the%20U.S.,of%20the%20population%20by%202050
[3] https://www.ahcancal.org/News-and-Communications/Fact-Sheets/FactSheets/SNF-Survey-June2022.pdf