Senior living facilities are seeing liability insurance rates stabilize amid increased capacity and competition, as they face a changing operating environment, but claims are becoming more costly, and concerns over claim severity are rising, industry sources say.

Primary general and professional liability rate increases remain relatively moderate for operators with strong risk management and favorable loss experience, but conditions are tougher in more litigious jurisdictions.

Excess liability rates, particularly on large accounts, are under greater pressure, however, as insurers restrict capacity and seek double-digit rate increases.

Across the senior living sector, which includes assisted living, memory care and skilled nursing facilities, operators face a growing array of liability exposures as they care for residents with increasingly complex needs.

Falls and pressure injuries remain among the most frequent claims, while allegations involving resident abuse and elopement — when a resident leaves a facility or secured area unsupervised — though less frequent, can result in particularly severe losses, sources said (see chart).

After a brief post-pandemic slowdown, claim severity increased sharply beginning in 2023, said Blaine Thomas, Bloomington, Minnesota-based vice president, global health care — technical underwriting and product development leader at CNA.

Medical inflation and litigation-related factors such as large jury awards are contributing to higher claim values, he said.

“It’s not all about the $10 million claims,” Mr. Thomas said. Lower-value claims that previously settled for $175,000 are now reaching anywhere up to $500,000, which creates “a significant expense burn” for this industry, he said.

Recent claims data also point to rising severity. Average indemnity payments on senior care claims increased to $253,000 in 2024 from $179,000 in 2019, according to a July report from MedPro Group, a Berkshire Hathaway company.

The average indemnity payment for memory care cases in assisted living facilities was $233,000, almost 23% higher than for assisted living cases with no memory care exposure, according to its analysis of more than 2,000 claims nationally.

Recent jury verdicts include a $110 million award by a Sacramento County, California, jury earlier this year. The case involved a 100-year-old resident with Alzheimer’s dementia who wandered outside a senior living facility in Sacramento and died of hypothermia. The award included $100 million in punitive damages. DigitalBridge Group, formerly known as Colony Capital and a defendant in the case, said in an Aug. 4 SEC filing that it disagrees with the verdict and intends to appeal any judgment and pursue all available post-trial remedies.

In July, a federal jury in Montana awarded nearly $16 million to the families of two residents of a Billings memory care and assisted living facility, including $15.5 million in punitive damages, in a case involving allegations of negligent care. Defendant Koelsch Senior Communities is seeking to reduce the punitive damages awards in post-trial motions.

Senior living claims can be particularly difficult to defend because they concern vulnerable individuals and may include allegations of neglect or abuse that can generate sympathy or anger among jurors, said William J. Mundy, a health care defense attorney at Burns White in Philadelphia.

Unlike many bodily injury claims, senior living cases often involve no lost wages or future medical costs, he said. Plaintiffs instead may focus on allegations of abuse or neglect and loss of dignity. “Once you hit that emotional component, and if you’re really good at it, maybe anger, then it pushes the value up,” Mr. Mundy said.

Excess liability under pressure

Some senior living operators are seeing double-digit rate increases for excess and umbrella liability coverage, and insurers have pulled back limits, industry sources said.

Benchmark Senior Living saw roughly 20% year-over-year increases in its excess liability program at its most recent renewal, said Rachel Thuerk, vice president, risk management at the Waltham, Massachusetts-based senior living operator.

The company’s primary liability program has remained relatively stable, she said. Benchmark, which has 72 senior living communities across nine states from Virginia to Maine, operates largely outside tough liability jurisdictions such as California, Cook County, Illinois, or Philadelphia, she said.

Excess capacity remains available, but at a higher cost, Ms. Thuerk said. “If I see another 20% or 25% year-over-year increase on excess liability, that may change the size of our tower,” she said.

Benchmark is considering retaining more of its risk through a captive, she said. The company is conducting a captive feasibility study for retained workers compensation losses, and other coverages could follow once a captive is established, she said (see related story).

Excess and umbrella liability rate increases can reach 30% or more, depending on the size of the insurance tower and where capacity is sourced, said Scott Wallace, Chicago-based managing director of the senior living and long-term care industry practice at Marsh Risk.

Insurers historically deployed $10 million and sometimes up to $15 million in individual excess limits, but those limits have generally been reduced to $5 million, he said.

Larger excess towers typically require multiple insurers, said Jack Harms, Boca Raton, Florida-based assistant vice president and broker at CRC. A $20 million tower could require three or four insurers.

“A lot of carriers start — they’re fine giving out $5 million — but once they’re putting out $10 million or more, then they start getting a little bit uneasy,” he said.

Abuse coverage can also become more restrictive higher up the liability tower. Coverage is generally available, but operators should check whether excess policies follow abuse sublimits in the primary policy, Mr. Harms said.

“You can think that there’s abuse coverage included in the excess, but because it’s sublimited on the primary and sublimits are excluded on the excess, all of a sudden you don’t have abuse (cover) going all the way up,” he said.

Primary liability pricing remains more competitive. Rates are generally flat to up single digits for operators with good loss experience in more favorable jurisdictions, said Alex Whipple, Phoenix-based senior vice president, senior living practice at CAC, part of The Baldwin Group.

California remains markedly tougher, even for operators with good loss records. Insurers may require substantially higher retentions or significant rate increases, he said. An operator with a $100,000 retention, for example, could see it increase to $250,000 despite having a favorable loss ratio, Mr. Whipple said.

Some middle-market and smaller operators in markets such as California are forgoing excess liability coverage because of its cost, he said. Larger operators, however, generally continue to buy the coverage.

Los Angeles and Sacramento counties remain among the toughest venues, while Cook County, Illinois, Florida and Georgia are also challenging, he said.

Claim severity has been increasing at a compounded rate of about 10% on primary coverage, while rate increases since 2023 have not kept pace, said Mr. Thomas at CNA. “The marketplace has undershot that severity trend,” he said.

Focus turns to risk management

Senior living operators are increasingly turning to technology to prevent falls and manage risk, industry sources say.

Benchmark Senior Living has been testing SafelyYou, an AI-powered camera system that detects falls, in several of its memory care communities, said Ms. Thuerk.

The system can help staff determine what happened during an incident, including whether a resident struck their head, lowered themselves to the floor or recovered without assistance, she said.

The video provides a record of what happened and helps staff determine the appropriate response, such as whether a resident needs to be transferred to an emergency room, Ms. Thuerk said.

Benchmark has also increased in-person staff training in areas including wheelchair securement, elopement prevention, chemical security and fire safety.

“Sending somebody a video that they click through and hit the button at the end, and you say, ‘Check, you’re trained.’ Very little of that gets retained versus in-person, physical, hands-on training,” she said.

Staffing, adherence to protocols and communication issues were overrepresented in paid senior living claims with payments of $500,000 or more, according to MedPro.

Insurers are also scrutinizing senior living ownership structures, including whether private equity is involved and whether facilities have changed hands repeatedly, said Dan Gilhooly, managing director, senior living practice at Arthur J. Gallagher & Co. in Rolling Meadows, Illinois.

“Who actually operates these? What’s the tenure that these individuals have owned and operated the buildings? And then, who’s calling the shots?” he said.

Frequent ownership or management changes can raise questions about leadership and staffing stability, while new equity investment could be viewed favorably when it brings an experienced owner and additional investment in a facility, Mr. Gilhooly said.

Insurers have been slower to translate the use of loss-prevention technology into specific premium discounts, said Carl Swan, Phoenix-based executive vice president, senior living practice at CAC.

Some systems, for example, immediately alert nurses through their phones if a resident may be falling, he said.

For larger insurance programs, insurers may instead provide $25,000 to $50,000 risk management grants that can help fund fall-prevention, wound-care or predictive-analytics technology, Mr. Swan said.

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Alternative risk transfer vehicles make inroads in tough sector

Senior living operators are exploring alternative risk financing options, such as captive insurers and risk retention groups, as claims severity rises and large jury verdicts pressure the sector, industry sources say.

Interest in captives and risk retention groups has increased, said Julie Bordo, CEO of PCH Mutual, a Vermont-based risk retention group.

PCH was formed in 2004 to provide liability coverage to small and midsize nonmedical residential care facilities, which historically had limited options for affordable, comprehensive insurance, she said.

The RRG, which operates in 47 states, most commonly provides limits of $1 million per occurrence and $3 million aggregate and also provides sexual and physical abuse coverage.

“For a long time, there wasn’t a lot else out there for them that offered comprehensive insurance at all or at a reasonable price,” Ms. Bordo said.

PCH also provides members with risk management resources, including documentation software designed to help facilities maintain records of resident care, she said. The services are available at no cost to members.

Group captive options have also expanded. In January, Marsh Agency launched Secure Harbor, a group captive offering general and professional liability coverage to skilled nursing, assisted living and senior living facilities.

Domiciled in Washington, D.C., Secure Harbor offers general and professional liability coverage with limits up to $1 million per occurrence and $3 million in aggregate to senior living services businesses with similar risk profiles.

Members have access to Marsh Agency’s third-party administrator services team and safety consulting experts.

The senior living sector has shifted significantly toward greater risk retention over the past decade, said Blaine Thomas, Bloomington, Minnesota-based vice president, global health care — technical underwriting and product development leader at CNA.

About 90% of insurance premium in the sector is now tied in some way to a deductible or self-insured retention, compared with a market that was once predominantly first-dollar coverage, he said.

Some larger operators are also using captive arrangements as they retain more liability risk, including fronted and matching-deductible structures, Mr. Thomas said.

“Some insureds are shifting and building towers. Some are going the other way because it’s cost-prohibitive, and in order to maintain their operating capability, they need to self-insure some of that exposure,” he said.

Large senior living operators with substantial self-insured retentions and buffer layers sometimes establish captives to fund those retained claims over time, said Jack Harms, Boca Raton, Florida-based assistant vice president and broker at CRC.

“That’s just going to be there to fund their SIR, their buffer layer, if and when those claims hit,” he said.

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Technology advances help senior living defenses but can also provide evidence of shortcomings

Artificial intelligence and other technologies can help senior living operators manage risks and defend claims, but they can also create new challenges when incidents occur.

Recent research points to growing adoption of AI in senior living, with 37% of industry professionals using AI-powered tools in 2025, up from 9% in 2024, according to a report by technology company LifeLoop (see chart).

Monitoring technology can improve documentation and help senior living operators defend claims, said Blaine Thomas, Bloomington, Minnesota-based vice president, global health care — technical underwriting and product development leader at CNA.

For example, radar-based technologies can document when staff enter a resident’s room in response to an alert and how quickly they respond, he said. “That can help us in defensibility in a courtroom,” Mr. Thomas said.

But the same technology can create problems when employees fail to respond appropriately. “It’s a double-edged sword for insureds that are adopting some of these technologies because your failures are documented just as well as your achievements,” he said.

Operators should ensure employees are trained and follow required procedures, or the technology could have the unintended consequence of increasing liability, he said.

Documentation plays a key role in defending claims, and missing or incomplete records can create substantial obstacles, said William J. Mundy, a health care defense attorney at Burns White in Philadelphia.

Skilled nursing and assisted living facilities operate under different regulatory and documentation requirements.

Electronic medication administration record software can help reduce documentation gaps by alerting staff when required records have not been completed before the end of their shift, he said. “All that has a great effect on liability,” Mr. Mundy said.

While technology can be helpful, it may also document delayed responses. Call-bell audits show how long staff take to respond. A response time of eight to 10 minutes, compared with an industry average of about five minutes or less, could raise issues in a claim, he said.

Most liability policies do not currently contain exclusions or limitations specifically addressing AI, Mr. Thomas said. In most cases, coverage will instead turn on whether bodily injury occurred, what caused it and whether the operator’s response was appropriate.