Leo Tolstoy said that the two most powerful warriors are patience and time. And that’s why today is a great day to be a HealthCap member.
In 2000, every insurance company and its little brother wanted to write liability coverage for senior living facilities for as little as sixty dollars per bed.
Unfortunately, at about the same time some law firms figured out how to sue nursing homes and win big.
One year later, almost nobody wanted to write the coverage and if they did, they wanted $3,000 per bed.
HealthCap started in 2001 to help the senior living industry control its own destiny.
2018 has been a different year.
Every year I tell you that several insurance companies stopped writing senior living liability.
In 2018, more are gone but fewer are coming. In 2019, more will go still.
Why? It comes down to three things: insurance rates, interest rates and execution.
Like it or not, senior living is getting riskier.
Why? With super low unemployment, staffing is a nightmare and that impacts care.
You combine that with the increased scrutiny of the industry, you have a powerful and bad combination.
Even though premium rates are rising, they still have not caught up.
Let me help with the math.
Over the past ten years, the average bed rate has been driven down every year while at the same time the average loss cost per bed is up year over year.
One year of price increases can’t make up for that.
Ten years ago, investment income could cover a multitude of insurance company shortcomings. That is simply no longer the case.
The third reason is insurance company execution. At HealthCap, we execute like no other carrier in our space and it is not even close.
Our members’ claim frequency is half the industry average. That means the rest of the industry has twice as many claims per bed.
Our members’ claim severity is half the industry average. Again, that means that other carriers pay double per claim.
How can other insurance companies who write senior living liability have twice as many claims per bed and pay twice as much per claim and collect the same amount of premium per bed as HealthCap?
They can’t, at least not for long.
That is why our list of former competitors keeps growing. Now it is almost 100.
History doesn’t repeat itself so much as it rhymes.
The senior living liability insurance market of 2018 rhymes with 2001.
There is still some pain to be felt by our competitors.
Rates will have to rise substantially before other carriers can hope to break even.
The one rub to rising insurance rates is the impact that has on facilities and owners. Nobody appreciates expense volatility.
Where does all this leave HealthCap? Right where we are. Right where we have always been.
We are a senior living industry solution to an insurance problem.
We are consistent. We take our members where they are and help make them better. That is why our members have half the claims frequency as the rest of the industry.
We execute like you read about. That is why we close claims for half the industry average.
I am happy to report that in 2018 HealthCap had another strong year.
Our written premium was $51 million, up from $44 million in 2017.
New business submissions were up over forty percent to our highest number ever.
Investment income was lower as a result of market volatility, and that will impact profitability in the short-term but will help us in the future.
If you are a senior living owner or facility that is committed to quality care, you should be with HealthCap.
If you are an insurance company that thinks that writing some nursing home and assisted living insurance might be the right niche for your healthcare vertical, you have got to be kidding me.
You are not good enough you never will be.
I give thanks for our Board of Directors, our association partners at AHCA/NCAL, our agent partners across the country and our fantastic HealthCap team.
Thank you for your patience and a great 2018.
It is a great time to be a HealthCap member.