// . //  Insights //  2020 Long-Term Care Professional And General Liability Study

By: Patrick O'Rourke, Rajesh Sahasrabuddhe, Lauren Morell, Joanne Wankmiller, Chris Schneider, Spencer Miller, Kenneth Smart, Bryan Kukulski

As the 2021 study kicks off, we welcome and would appreciate your participation for the upcoming analysis. As with the 2020 report, there is no cost to participate and all participants will receive a copy of the report and an invitation to the presentation of the results. If you’re interested in participating please contact Oliver Wyman regarding the data collection process or with any additional questions at LTCBenchmark@oliverwyman.com.

Watch our presentation of the report

Pre-pandemic claims costs appear to be stabilizing for Long-Term Care providers.

Oliver Wyman’s Actuarial practice collaborated with Marsh’s Senior Care Practice to perform the 2020 Professional and General Liability Benchmark for Long-Term Care Providers. The analysis contains data from more than 30 participants with approximately 207,000 long term care beds. The data used is as of December 31, 2019.

Executive Summary


We developed the principal findings in this study on a countrywide basis. We have also provided state-level findings where we deemed the data and results to be credible. The results by state can vary widely and are directly influenced by the claims history of the participant’s data.

To reduce the influence of large claim settlements, we limited the claims data — indemnity plus allocated claims adjustment expense (“expense”) — to $1 million on a per-occurrence basis. Similarly, we excluded claims with payments of less than $500 to remove any bias from nuisance claims.

Understanding that there are differences in reserving practices between participants, this analysis applies actuarial models to closed claim data to develop estimates on an occurrence year basis.

As this was the first analysis provided by Oliver Wyman, we could not reconcile differences between our findings and results to those provided in the prior benchmark analysis. Findings can vary materially due to both the actuarial methodology used to determine occurrence year ultimate estimates and, more importantly, changes in the composition of participants. We will be better able to reconcile data across studies in future analyses.


Oliver Wyman asked long-term care providers and insurers to submit their professional liability and general liability claims and exposure data to support this study. We have not attempted to audit this data or reconcile data across various valuations.

More than thirty providers submitted data for this analysis. Our analysis focuses on paid and closed claim data comprised of nearly 11,000 closed claims with approximately $1.84 billion in paid indemnity and expense over the past 10 years. We limited the claims to a $1 million retention limit and excluded claims of less than $500. The participants in this study include skilled nursing facilities, assisted living facilities, home health care providers, and a few independent living facilities.


We present our countrywide findings in Table 1.

Our analysis is based on data through December 31, 2019, and therefore does not consider the effect of the COVID-19 pandemic. Further, we do not include any adjustments to our estimates for 2020 and 2021 due to COVID-19. Actual claims experience in calendar years 2020 and 2021 may be materially different than we project due to the pandemic. However, these projections provide a baseline against which we can measure the effect of the pandemic on claim costs in future studies.

The metrics we present are based on claims limited to $1 million per occurrence and excluding payment values less than $500:

  • Claim frequency is the number of claims estimated to close with payment (indemnity and/or expense) per 100 occupied beds. We forecast frequency to be 0.76 claims per 100 occupied beds in the 2021 occurrence year. We project claim frequency to increase in 2021 by 0.4%.
  • Claim severity is the average ultimate size of a claim estimated to close with payment (indemnity and/or expense). Claim severity is forecasted to be $227,900 on a countrywide basis in the 2021 occurrence year. We project claim severity to increase by 2.7% per annum.
  • The loss rate represents the cost needed to pay indemnity or expense per occupied bed. We forecast the loss rate to be $1,730 on a countrywide basis in the 2021 occurrence year. We project loss rates to increase at 3.1% per annum.

Figure 1 provides the estimated loss rates for the past ten occurrence years, along with our projected 2020 loss rate.

Figure 2 provides the estimated frequency for the past 10 years and our projected 2020 frequency. The estimated ultimate frequency has remained relatively flat over the past few years.

Figure 3 provides the estimated severity for the past 10 years and our projected 2020 severity.

Download our full report to read more.