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The adult day care service market has grown as the population has aged, but services are not restricted to the elderly. Disabled adults who are no longer eligible for children’s services but who still require extra care can also receive services.
Adult day care services are provided by both for-profit and not-for-profit operations. They can be provided in home, at a facility, or a combination of the two. Transportation services to and from the facility may be available in addition to transportation to and from medical appointments.
David Weisenberger vice president and division manager–allied healthcare, medical professional, and non-medical professional at James River Insurance Company, says, “James River writes both for-profit and non-profit adult day care facilities. We have a very broad appetite with respect to size of facility, from the very small, more social-oriented, single-location facilities to large, multi-location facilities with multiple acuity levels.”
David Derigiotis, director of professional lines at Burns & Wilcox, explains that his carriers consider three different types of adult day care. “First are facilities that provide opportunities for socialization to adults who want to interact with others and are able to care for themselves. The second type specializes in caring for adults who have Alzheimer’s or another form of dementia. The third kind provides day care for adults who have physical challenges and need assistance with daily personal care, administering medications, monitoring blood pressure, and/or changing of feeding tubes.”
Gail Pierce, senior commercial undewriter at Roush Insurance Services, says: “With the multiple carriers we use to place business, we are able to write almost any type of adult day care operation – for profit, non-profit, ambulatory, or non-ambulatory with medical care.”
The markets used are primarily non-admitted because of the flexibility they provide in pricing for the specific exposures in a given center. Carriers include James River, Scottsdale, Essex, ProAssurance Specialty, ArgoPro, Hiscox USA, Kinsale, and Lloyd’s of London.
“Adult day care is a term that encompasses a wide range of services, acuity levels, and clients,” according to Mr. Weisenberger. “Some adult day care centers are for active seniors or the mildly developmentally disabled who may need a little help to have meaningful social interaction with their peers. They can participate in a wide range of activities and have fun while developing friendships. Some facilities are for severely developmentally disabled adults or seniors who cannot be left on their own during the day and who require significant assistance with activities of daily living.”
Ms. Pierce says, “Working with the elderly increases the possibility of having to handle health or physical issues. These may be known or unknown and can include such problems as loss of balance, dementia, high blood pressure, or other issues that require immediate response by staff members. It is important that all personnel be well trained and prepared for anything that might happen.”
Slip and fall injuries are a major cause of loss in all types of adult care centers. Mr. Weisenberger explains, “Seniors who fall are frequently injured more severely than younger people, so slips and falls can drive both frequency and severity.”
In facilities that provide day care for Alzheimer’s patients and those with other forms of dementia, Mr. Derigiotis explains, “The potential for severity exists if patients wander out of the building and walk into traffic or other dangerous situations. The facility must be secure with locks and alarms, and staff must be trained to constantly observe patients to prevent them from leaving the premises.”
According to Mr. Weisenberger, two other potential loss exposures are improperly administering medicine or medical services and assaults on older patients by younger patients. These are infrequent but can be severe when they do occur.
Pam Gosslin, underwriting manager, allied heathcare at James River Insurance Company, says, “We look at many criteria to evaluate the risks associated with a facility. They include licensure, staffing and staff training, number of attendees, acuity level, services provided, and loss history. Red flags would be atypical claims or claims that speak to inadequate risk management and inadequate or improper training or staffing. We also pay attention to the mix of clientele. Young, active developmentally disabled clients mixed with the aged sometimes end up with volatile consequences.”
“Complete details about the premises are required, including security measures taken to prevent anyone from exiting the premises without the staff's knowledge and approval, and are critical to underwriting,” according to Ms. Pierce. “ All staff should be trained in emergency response procedures, and these procedures should be well documented. Red flags include high staff turnover, fluctuating attendance, and lack of management experience.”
Mr. Derigiotis says, “General liability and professional liability coverages are essential, and they are usually packaged for this class. Another essential coverage is sexual abuse and molestation. Some carriers prefer not to write this coverage, but it is available and is a necessity for any adult day care facility. The facility also needs property and related coverages, workers compensation, and commercial auto if that exposure exists.”
“Based on the aging Baby Boomer population, this type of operation will become more common to assist with care of the elderly,” notes Ms. Pierce, “This is definitely a growing field that will continue to expand as the population ages, especially if the economy continues as it has for the past few years. Many carriers write this class of business. Most can offer all of the coverages needed to handle exposures peculiar to individual accounts. We have seen increased competition and a slight decrease in premiums for this class, so there is plenty of capacity, and it should not be difficult to place these risks.”
Our experts believe that this is a marketplace that will continue to grow. However, each risk within the classification must be evaluated based on the services provided and the client group served. Underwriters will demand detailed information, but pricing is attractive and capacity is substantial.
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