Aon Study Finds Stability in Nationwide Liability Costs in the Long Term Health Care Sector
12 Maggio 2008 - 9:15PM
PR Newswire (US)
Tort reform's lasting impact and other influences are limiting the
growth of frequency and severity of claims CHICAGO, May 12
/PRNewswire-FirstCall/ -- Aon Corporation (NYSE:AOC), the leading
provider of global risk management and consulting services, today
released an analysis of liability in the long term care industry,
finding for the first time in nine years of reporting that
liability costs are stable on a national average basis. (Logo:
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO) The Long
Term Care 2008 General Liability and Professional Liability
Actuarial Analysis, with the endorsement of the American Health
Care Association (AHCA), utilized data representing 15 percent of
the total number of long term care beds in the United States The
study found that average general liability and professional
liability loss costs nationwide are at approximately $1,460 per bed
after peaking at $2,030 per bed in 1998. This trend is driven by a
reduction in the average severity of claims from a high of $261,000
in 1998 to $138,000 in 2007. In addition, the number of claims
(frequency) has stabilized in recent years -- hovering around 10.6
claims per 1,000 occupied beds after rising from 6.7 claims in
1997. "The impact of tort reform has been lasting, but it is not
the only factor contributing to the stabilization of liability
costs in the long term care sector," said Theresa W. Bourdon,
managing director and actuary for Aon Global Risk Consulting. "Many
other changes, including the withdrawal of some long term care
facilities operators from expensive markets, more effective defense
strategies, the use of arbitration for claims settlement and
significant improvements in quality of care, have combined to help
alleviate the liability crisis." In addition to reviewing trends
nationwide, the Long Term Care 2008 General Liability and
Professional Liability Actuarial Analysis reviewed 13 states in
detail. Of the profiled states, Alabama, California, Massachusetts,
Ohio, Pennsylvania, Tennessee and Wisconsin showed increasing loss
cost levels. Other states, including Arkansas, Florida, Indiana,
New Jersey, Texas and West Virginia, exhibited stable or decreasing
loss cost levels. Liability costs dropped significantly in states
that passed tort reform in the last several years. As a group, the
average loss cost of these states (Florida, Georgia, Louisiana,
Mississippi, Ohio, Texas and West Virginia) dropped from $7,190 in
1998 to an estimated loss cost of $1,230 in 2005. The loss cost for
these states increased only slightly through 2007 to $1,270.
Further, both the frequency and severity of claims decreased in
states that have passed tort reform. The number of claims per 1,000
occupied beds for this group peaked at 20.9 in 2002 and has since
dropped to 12.2 in 2007. The average claim size plunged from
$384,000 in 1998 to $104,000 in 2007. High cost levels persist in
Arkansas, California and Tennessee, where loss costs per occupied
bed are multiples of countrywide averages. At $5,460, Arkansas has
the highest loss cost of any state. Tennessee has the second
highest loss cost at $4,510 and California the third at $3,410. The
driving factor for the high loss costs in these states is average
severities that are well above the national average. At the top of
the list is Tennessee, with a 2007 indicated average severity of
$455,000. In all other states, excluding the thirteen states
profiled, the study found that loss costs peaked in 2002 and have
increased slightly since 2005. The analysis of claims in all other
states indicates that loss costs have risen from $630 in 1997 to
$1,260 in 2007. The Long Term Care 2008 General Liability and
Professional Liability Actuarial Analysis represents data reported
from 37 long term care providers operating around the country and
approximately 20,300 individual non-zero claims from long term care
facilities. The complete study, including detailed analysis for 13
states, can be purchased for $350 by visiting
http://www.ahcancal.org/. For more information, go to
http://www.aon.com/. About Aon Aon Corporation (NYSE:AOC) is the
leading global provider of risk management services, insurance and
reinsurance brokerage, human capital and management consulting.
Through its 36,000 colleagues worldwide, Aon readily delivers
distinctive client value via innovative and effective risk
management and workforce productivity solutions. Our
industry-leading global resources, technical expertise and industry
knowledge are delivered locally through more than 500 offices in
more than 120 countries. Aon was named the world's "best broker" by
Euromoney magazine's 2008 Insurance Survey. Aon also was ranked by
A.M. Best as the number one global insurance brokerage in 2007
based on brokerage revenues, and voted best insurance intermediary,
best reinsurance intermediary, and best employee benefits
consulting firm in 2007 by the readers of Business Insurance. For
more information on Aon, log onto http://www.aon.com/ Media Contact
Raphaele Schnoll 312.755.3592
http://www.newscom.com/cgi-bin/prnh/20041215/CGW049LOGO
http://photoarchive.ap.org/ DATASOURCE: Aon Corporation CONTACT:
Media, Raphaele Schnoll, +1-312-755-3592, , for Aon Corporation Web
site: http://www.aon.com/ http://www.ahcancal.org/
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