RHONDA DEMENO: Today, we will focus on WTW and the senior living industry health vertical. Maryann McGivney along with Randy will take a deep dive into WTW's distinctive industry vertical specialization and how it accomplishes the building of a risk management program customized to senior living operators' needs.
The podcast will provide insights into the current state, as well as the future of senior living risk management programs and highlight WTW's mission on segment specialization and comprehensive approach to brokering and servicing solutions.
Today's discussion will highlight the benefits of managing risk across all insurance segments specific to senior living. We will provide details on current and future risks that senior living operators face. And we will discuss concepts for designing a customized risk management program to drive down total cost of risk.
So, let's get started. My first question goes to Randy. Walk us through WTW's senior living practice evolution.
RANDY STIMMELL: Yeah. I'd be glad to. On the topic of specialization that you just mentioned, Rhonda, it was very important approximately 25 years ago, the late 1990s, to form a specialized practice to address senior living.
Now, back then, there was a very prominent law firm that was going after skilled nursing facilities and winning a bunch of verdicts against them. And it transitioned into the lower levels of acuity as far as lawsuits and verdicts.
There were underwriters and insurers that were exiting the marketplace. It was very much in turmoil 25 years ago. WTW decided to address those concerns and to help our clients to form a specialized practice. And it made perfect sense to have a specialized practice, because when you look at the insurers who underwrite the business, they have specialized underwriting facilities and underwriters who address the risk.
And they want to work with specialists too, and that's why we formed the practice. We also developed significant services capabilities for our clients. For example, clinical risk management.
RHONDA DEMENO: Really good information. So Randy, you have seen a big evolution. I'm going to turn over to Maryann now. And Maryann, can you bring us the speed to present day with WTW's senior living practice? Where are we? Can you discuss a bit of the integration of senior living and the health care practice?
MARYANN MCGIVNEY: Yeah, absolutely, Rhonda. Health care continues to evolve at a rapid pace and that includes senior living as well. Right. There's a lot of changes going on in the industry. Some of them were in process years ago.
Some have sped up due to the COVID and the pandemic, which made us look at health care in a very different fashion. And we had to consider things we never had to consider before. So as health care continues to evolve and as the system continues to change, one of the big things we're finding with senior care is just that the acuity levels are becoming higher.
Of course, we have the baby boomer population is a huge population that needs that senior living care. And they don't want to necessarily have to move from place to place. They want things and services brought to them all in one place.
And so, as this population ages, as their health needs change, they want those met by the organizations that are taking care of them. So, we continue to see in the senior space higher acuity levels than have ever been looked at before.
We also have this situation with health care right now and the cost of it. Right. It's very expensive, and we're trying to figure out how to do this more efficiently. And so, we have everybody on that spectrum of health care providers that is operating at the highest level of their license in the highest services that they can provide in order to maximize the efficiencies.
So that continues to push those acuity levels. And so, it was important as we looked at where is senior care going, and we looked at how we provide health care services to our clients. We thought, hey, there's a lot of overlap here, and we should be capitalizing on the fact that we've got knowledge about higher acuity that we can bring to our senior care clients.
And so, we've really wrapped those practices together, and the same thing has happened in other areas of health care as well, managed care or what have you, life sciences. So, it was really important to us that we capitalized on that industry specialized knowledge to bring to all of our clients but particularly, our clients in the senior care space.
RHONDA DEMENO: So, Maryann, can you provide some examples of the industry specialization and the benefits for senior living clients? You addressed it a bit. But can you give a little bit more detail around that?
MARYANN MCGIVNEY: Sure. So, one of the beautiful things about industry specialization is it allows us to see these trends and patterns. Right. So, we were able to look out and say, hey, senior care is going to have higher acuity levels.
These are the trends that we're seeing in losses. These are the risks that we see on the horizon. Because we're focused on that particular industry and because we have enough clients in that space that we can see the patterns, and we can see what's coming.
Things don't always hit across the country in the same fashion. Some folks in one part of the country are experiencing something that in the other part of the country they haven't seen yet. So, by having that industry specialization and that industry focus, it allows us to say, hey, we're starting to see a pattern over here.
Let's make sure that the folks over here are aware that while they may not have this yet, this is probably coming. So, we can see it when we look at what's going on with losses. We can see it when we look at what services organizations are providing, what are concerns of the business in running the business.
But you can also see it in things like regulation and laws and the attorneys and what they're focusing on. So that industry specialization allows you to not only address your client's current issues but look out on the horizon and predict what are the things that you're going to face that maybe you haven't seen just yet.
RHONDA DEMENO: Randy, Maryann just spoke about losses. What do you feel are the key risks facing senior living organizations today?
RANDY STIMMELL: Sure. Constantly, we're speaking to clients and prospective clients as well as pulling our associates on areas that potentially are high in severity and more difficult to manage. And we put them into what's called a heat map and chart them out of what are the key areas that are of concern to the industry.
First and foremost is global talent and skills race. Really, our care associates and various associates are critical in resident care and satisfaction. What's the ability to attract and retain qualified associates?
How successful are you in hiring, onboarding, and training of staff to obtain and maintain competency? And closely associated with it is associate mental health, employee engagement, potential burnout. We saw that especially during and after the pandemic. Their morale, what's the accountability and the culture of the organization.
So staffing is critical not only in senior living but in many industries right now. Regulatory complexity and enforcement are also a key driver of concern. There's increasing regulatory requirements for skilled nursing, as well as assisted living and memory care.
Now, I mentioned staffing before, but the administration's mandate to increase staffing regulations for skilled nursing has gotten a lot of press. And it does have some concern for the industry, various staffing regulations, including DE&I. And that would be diversity exclusion and inclusion.
And the industry overall is pretty good about that. There is a diverse associate population. And finally on regulatory complexity and enforcement is ownership disclosure that many states are requiring to protect the people over profits consideration.
Is it really better to have a for profit or a not-for-profit organization? And that's beyond the scope of this today. And lastly, I would see the insurance marketplace challenges, natural events, extreme weather events, and emergency preparedness.
For example, hurricanes, tornadoes, wildfires, natural disasters, convective storms, polar vortexes, pandemics, you name it. The industry has been hit with that over the years. And then also a very unfortunate situation is terrorism and political violence, civil unrest, act of assailant, and the like. Those are some key considerations that come out from our heat mapping.
RHONDA DEMENO: Yes. I think that you really laid that out very well. And speaking of all those risks, Maryann, how would the industry specialization support identifying and addressing the risks that Randy just mentioned?
MARYANN MCGIVNEY: I mentioned earlier that industry specialization allows us to look out on the horizon and see some of these coming or at least to recognize the trends, what are the issues that everybody's struggling with versus something that may be very specific to an individual organization.
This specialization, though, also allows us to address some of these issues, because we can then go to our markets-- we can go to our commercial markets. And we can talk about these are the issues that our clients are facing.
Now, sometimes there's coverage for those things already. So, we can talk about what then backend services maybe the carriers can provide to help address those needs if it's already covered. But we can also talk about if it's not covered, is there an ability to find coverage for it? Is there a way to cover it?
Can we add it on to a current policy? Do we need a whole new coverage form to look at this particular risk? That's how things like terrorism policies arose. There was a need for that coverage. And so, the market was able to respond and put coverage in place.
But it also allows us internally to look at things like our own risk consultants. We have clinical risk consultants. We also have lost control folks who can address other types of risks like general liability or workers' comp, et cetera.
But we can help to put together projects and programs that can address those particular issues that we see on the horizon. And we can then help our clients to mitigate those risks. We also do a lot of modeling.
We use a lot of analytics, and so we can factor these things into our analytics so that we can help to give our clients the appropriate recommendations when it comes to buying coverage. What are you getting for your money?
For instance, we can run a cyber quantified and say, here's what we think are the appropriate limits you need to purchase. Here's what your expected exposure is if you have a loss in this particular area.
So, industry specialization not only allows us to look at what are those risks and what risks are heading your way, but it can also help us to figure out how do we cover those risks and how do we mitigate those risks if they're happening within our organization.
RHONDA DEMENO: Randy, Maryann talked about what's on the horizon. How do you feel that the commercial market is responding to Kern and those future risks, those risks down the road?
RANDY STIMMELL: Well, some would say that markets tend to overreact, and what comes to mind is after the COVID-19 pandemic, a lot of the absolute exclusions were put onto the policies. But I don't know if that was an overreaction not knowing exactly how that would pan out or an appropriate reaction.
So, there's a couple of schools of thought along those lines. But what markets have to do is address how much risk they're going to take. And sometimes there are amendments that they have to make to their policies where they might reduce some coverage grants or exclude them as I mentioned earlier.
They might want to reduce the limits that they feel comfortable putting out on the top end of the program. And then on the bottom end of the program, they might want to increase deductibles or self-insured retentions rather than provide full ground up coverage.
RHONDA DEMENO: So Randy, if I were a senior living provider/operator, what could I do to best position my organization to address market concerns and drive the best results possible?
RANDY STIMMELL: To place yourself most favorably in an underwriter or an insurer's eyes would be to develop and maintain solid risk management best practices and clinical vehicular property, engineering, and the like.
Demonstrate that you understand the exposures to accidental loss, and you are addressing them in your best practices. When you submit to the insurer for competitive quotes, make sure you have a quality and complete submission.
Underwriters are inundated with numerous organizations marketing their programs. So, if you can allow them to do their job more efficiently and provide them with good quality and complete information, you're going to go to the top of their stack.
And then also what we found to be very key is to have a partnership with your insurer. Now, how do you do that? Meet with them on occasion. Just be something more than a website or an email address and the like.
To have face-to-face meetings with your insurers and underwriters really goes a long way. And it really tends to foster the partnership.
RHONDA DEMENO: Yeah. From my experience, I really believe that partnership is so important. The other area that I'm always interested to learn more about is alternative of risk products. So, Maryann, turning the question over to you, are there applicable alternative risk transfer products that would work for senior living organizations or apply to senior living organizations?
MARYANN MCGIVNEY: Sure. Yeah. It's a great question, Rhonda. And we get that question a lot over the last couple of years, particularly when rates were on the increase and as Randy mentioned, carriers were restricting coverage around COVID and pandemics.
A lot of clients were interested in, do I have any alternatives? Am I stuck with the traditional structure? And the answer to that question is very independent on the particular organization. Some folks for various reasons might need to stay in the commercial marketplace with very low or no deductibles, whereas others have the ability to take on a self-insured retention or even enter a structure that includes a captive or a risk retention group.
So, I would emphasize there's probably no perfect answer. It really depends on your situation. But there are absolutely alternative structures that are available to senior living organizations. And they should be considering them regularly.
I would say, even if you're happy with your current program, and you're not having a problem with your renewal, you should at least be having some dialogue around what else is out there. And is this the time?
When is the time? Is there something I should be looking at that maybe is not suitable for this year but maybe a couple of years down the road? So, I mentioned captives risk retention groups. We have programs with stretch limits.
So, the limits will apply over multiple years. We can do buffer layers, and sometimes you hear terms like inter aggregates and corridors. Basically, there are different types of buffer layers you can put into place.
So, there are a number of things you can do besides just traditional straight commercial insurance. A lot of them do involve some retaining of risk yourself. So, you have to take a look at whether that's even feasible for your organization.
So, I would highly encourage our senior living organizations to have those conversations regularly with their insurance broker and internally with their boards and their constituents to make sure that their program is constantly being evaluated and responding to where they're going based on what they know today.
RHONDA DEMENO: So, we talked about those alternative risk transfer products, but Maryann, are there any tools or resources that senior living organizations can use to prepare for current risk and future risk?
MARYANN MCGIVNEY: Sure. Absolutely. And this is a great question, because there's a lot that you rely on your broker to bring to the table. And certainly, they can do that. But you're not limited there.
There's lots of resources out there, and for folks that are curious or want to make sure that they're fully exploring what can impact their organization, there are a lot of organizations that you can tap into.
Just a few of which certainly your organizations like Argentum, ASHA, so the American Senior Housing Association. NIC, which is the National Investment Council. So, there are lots of organizations out there that put out a lot of information that you can read, you can participate in educational sessions where you can hear about what's going on with other organizations that are similar.
ASHRAM is another one that we are active in that we wish we'd get more engagement from the senior living community in ASHRAM. I think ASHRAM is trying to extend what they do in the senior living side in order to address that community.
So, I think they could be another organization going into the future that provides a lot of good information and could be another good resource. So certainly, there's a lot of organizations that you can tap into.
But I would also tell you, you should be able to tap into your insurance broker as well. I mentioned that we have a lot of analytics at WTW that we use. And so that can help you to analyze your program and look at your program.
We have an annual senior living risks symposium. We used to do it standalone, but as we talked about some of the blurring of lines in what health care organizations are doing, we've now combined it with our health forum and our managed care roundtable.
So, we have three tracks of educational sessions, one is dedicated specifically to senior living. It's a great place to go to hear what's going on with your peers, what are the hot topics. We also put out a lot of thought leadership.
We do a claims and annual claims benchmarking study to provide our senior living clients and those out there in that community to be able to look and see what are the trends that we're seeing in terms of claims and where claims are going.
So, there's an awful lot of tools and resources out there. I think sometimes it can be a little overwhelming how much information is out there. But certainly, I would tell you that you've got a lot of sources that you can tap into to help you on your journey.
RHONDA DEMENO: That's quite a bit. And there are a lot of outlets that really can assist senior living organizations and setting up a good sound risk management program. So, thank you for that.
Maryann, could you provide some examples of calling upon other industry verticals to help meet superior client solutions? Are there any suggestions that you have or some examples of how we can call upon those other verticals?
MARYANN MCGIVNEY: Yeah. And that's the whole gist of our industry vertical focus at WTW is we have 12 industry verticals currently. We will constantly and continually evaluate if we need more. But what we found is that that industry specialization brings a lot to those clients and prospects.
But it's also there's a need at times to tap into other industry specializations. So, a great example for the senior living community is construction. Right. Everybody's building something. Well, we have a construction industry vertical.
So, we have a lot of clients in the senior living space that can also tap into our construction expertise when they have a project going on. And we can help them to figure out how best to manage the risks around that project.
We have a real estate industry vertical. So, we have a lot of senior living clients that are set up as REITs, where real estate is really important to them and having that expertise is important. And so, we can tap into those folks.
We also have our private equity and transactional services team. So, this basically is our M&A team, mergers and acquisitions team, to help folks as they're doing transactions and certainly engages with a lot of the private equity companies that are funding the transactions.
So, these are all examples of where we can tap into other industry expertise within WTW. Now, of course, we also have the advantage at WTW of having a really strong health, wealth, and career group that does employee benefits.
So, Randy mentioned staffing as an issue earlier, one of the risks on the horizon. What you're offering to your staff in terms of benefits and advantages of being an employee of your organization, you can really help with staffing issues.
So that's another piece of our organization that our clients can tap into as they try to figure out how do we work on that staffing risk and how do we resolve those issues. So, industry specialization is great.
And it certainly can bring an awful lot to our clients, but when they need to step into another area of expertise, we've also got that ability to pull in some other experts. And so, we can really provide a well-rounded holistic solution for them, regardless of where their organization is going and what they're working on today.
RHONDA DEMENO: Randy, did you have anything that you wanted to add to that?
RANDY STIMMELL: No, that was pretty comprehensive.
RHONDA DEMENO: Well, then the next question, Randy-- I'm not going to let you get off here too easy. What do you feel should be top of mind for senior living clients when engaging with a broker?
RANDY STIMMELL: That's a great question. Many of our clients do not have an expansive professional risk management staff. They have other associates, whether they be C-suite or management associates and treasury, human resources, finance, and the like, legal, that focus on risk for the organization.
I think first and foremost is having to view your broker partner as an extension of your organization and your risk management focus. And many of the clients that we have oftentimes feel very comfortable in having us manage and keep them apprised, so they can focus on their business operations.
We touched upon thought leadership. You definitely want a broker that's going to be front and center of the issues and reporting back. And then also with a broker, you're going to want to have consultants to help you drive down your costs over time, whether it be premiums or your exposure to assumed loss or deductibles or retentions.
RHONDA DEMENO: Maryann, do you have anything that you think should be top of mind for senior living operators?
MARYANN MCGIVNEY: I was hoping you would ask me that question. Yes. And I think Randy's right. I mean, I think expertise is a huge piece of it. Right. You need to have someone who understands your business, or you can miss things, very easily miss things. Really critical things can be missed.
So, I think expertise is really important and having the resources is really important. But I think another big piece of this is trust and integrity. Right. You want somebody who understands your business, but you also want somebody who really is looking out for your best interests.
You want somebody that you can feel comfortable that the ideas, the topics that they're bringing to your attention, they're really bringing them because they know this is important to your organization and your industry. And they have some solid solutions for it.
And they're not just trying to sell you another project. They're not just repeating or parroting some session that they heard last week that they said, this was a hot topic. But folks that really understand the business and are really going to treat you like family and take into account your concerns and your needs, not just their own agenda. So, I think that's really important as well.
RHONDA DEMENO: Great feedback there. So, we're about ready to close this podcast. Maryann, do you have any final comments?
MARYANN MCGIVNEY: Sure. So, the only final comments I would make is, look, this is a much different world for risk and insurance than it was 20 years ago, even 10 years ago. Once upon a time, things were pretty steady, and policy forms were very similar.
And underwriters' reactions were very consistent. We live in a lot of tumultuousness, if that's a word, today. There's an awful lot of change. There's an awful lot of nuance. So, I think it's more time consuming on our clients.
I think it's even more important that they're working with somebody that understands not just their industry but the marketplace and what's going on in the marketplace. So, I think it's a good time for our clients to be really inquisitive.
I think it's a good time for them to question the things that don't seem right or that don't make any sense. But I think it's really important for us as brokers that we get into the details of what's going on in our industry. And we understand the details of what's going on in the market.
And we really drive the marketplace to produce products and services that our clients need. So, I would just encourage everybody out there to use all the resources you can, reach out to all the people that you can.
Tap into all the people you can, because there's a lot out there. And it's overwhelming.
RHONDA DEMENO: Great information. Randy, do you have anything that you-- any final comments that you want to add?
RANDY STIMMELL: I completely agree with what Maryann just said and closely associated with it. Since senior living is a caring and sharing industry to continue to help us help you. And by that, I mean provide your thoughts on risks that your organization is facing.
Help us to expand our benchmarking studies and our thought leadership with good guidance that you provide. And I think if we all work together and have knowledge flow going in all directions, it'll be superior over time, which we all strive for.
RHONDA DEMENO: That's such a great way to wrap up. We know that senior living, the risk will continue into the future. But our partnerships and vertical specialization certainly can help bring the best outcomes to our clients.
In closing, I want to thank Maryann for spending time with me today to discuss WTW's unique approach to brokering solutions. So, thanks, Maryann, for joining us today.
MARYANN MCGIVNEY: Thank you, Rhonda. And thanks, Randy. I really enjoyed our conversation.
RHONDA DEMENO: And I also want to thank Randy for spending time with me today to give some insight into the risk associated with senior living and brokering solutions. So, thank you very much, Randy.
RANDY STIMMELL: Oh, thank you, Rhonda. And thank you, Maryann. I really appreciated having this discussion with you this morning.
RHONDA DEMENO: And if any of our listeners would like more details on today's topic or to contact either Randy or Maryann, you can review their contact information on our podcast page. We hope you found today's information helpful.
Please refer to the WTW's Senior Advisor podcast page to learn more about hot topics for senior living and future Senior Advisor podcasts. This concludes today's podcast. Thanks for listening.
SPEAKER: Thank you for joining us for this WTW's podcast featuring the latest perspectives on the intersection of people, capital, and risk. For more information, visit the insights section of wtwco.com. WTW hopes you found the general information provided in this podcast informative and helpful.
The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us.
In North America, WTW offers insurance products through licensed entities, including Willis Towers Watson Northeast Incorporated in the United States and Willis Canada Incorporated in Canada.
