Covid-19 and the Impact on Care Insurers' Losses

Increase in care insurance premiums

Have you seen an increase in your insurance costs and the cover that is now available to you from your broker and insurers?

Insurance rates have been on the increase for the last nine consecutive quarters, even before the impact of Covid-19, due to several factors:

  • Significant global catastrophe losses ($100bn+ per annum) in 2017-2019 (hurricanes, windstorms, typhoons, wildfires etc) which has fed through to the UK market.
  • UK claims for flooding/storms are increasing in both frequency and severity on an annual basis.
  • Double-digit attrition claims inflation on Motor Fleet and Liability losses due to Brexit and exchange rates, growing claims litigation culture, regulatory reforms (e.g. Ogden Rate).
  • Property losses from cladding since the Grenfell residential fires and various food/hotel fires have had subsequent impact.

Impact on care insurance policies

This has meant that several insurers and Lloyds syndicates now no longer offer cover options to certain areas including the care sector, and means:

  • Fewer markets to compete, so insurers can drive pricing and impose cover changes.
  • Insurers are now highly selective when looking at new clients and will target the best risks based on CQC and claims performance.

About the author

Carolyn Baker Mellor Care Insurance Articles AuthorCarolyn Baker-Mellor is a respected industry leader with over 35 years' experience within the care insurance sector. She works across a wide spectrum of insurance product and policy development, delivery and optimisation for care industry clients, including managing global corporate accounts, working closely with trade associations, and helping clients in protecting their businesses and personal assets.



Care insurance from Towergate

Towergate Insurance are partners with Care England, NCF, Homecare Association and a number of regional associations and are actively engaging with local Government officers to provide updates on market restrictions. We also offer to speak with the CQC oversight committee about challenges within the insurance sector and work closely with the British Insurance Brokers‘ Association and the Association of British Insurers to ensure that wider messages are being heard across the market.

To find out more about how we can assist you see our care insurance webpage or email We can also advise on market updates.

Impact across the care sector

There have been significant and rapid changes and contraction during the lockdown for social care providers, most adversely for those providing elderly or nursing care, with some significant movements in market approach and capacity to offer cover and terms.

Potential liability claims scenarios from Covid-19

In these uncertain times, the impact of COVID-19 has led insurers to review potential financial quantum and exposures around potential liability claims scenarios. Several actions have been taken by insurers to the sector (mainly elderly and nursing home providers) including:

  • Total withdrawal from offering insurance solutions to the sector (and some brokers losing their own markets)
  • Most insurers looking to pause offering terms to potential new clients
  • Most insurers looking more closely at new startup operations
  • Most insurers are looking to break existing Long-Term Agreements (LTA), through increases to rates and premiums and updating policy wordings, in some cases using a combination of both.
  • Cover changes are not blanket, some markets are excluding COVID-19 totally including to the public liability covers, others are looking to offer inner limit of cover around COVID-19 on public Liability with severe restrictions, and other continue to offer wider protection and limits
  • One insurer in the sector is restricting cover to go beyond COVID-19 exclusion and now to exclude communicable disease which could include Norovirus or the flu as examples.

Although you may not have been affected by the market changes yet due to having a renewal date outside of March-July 2020, it is unlikely that you will not be affected moving forward. We would recommend that you contact your insurance broker at least three months ahead of a known renewal to discuss options and market movements, as these continue to change on a regular basis.