Within 40 years, more than 40,000 living Australians will have blown out the candles on their 100th birthday cake. It’s a stark contrast to 40 years ago when there were just 122 living centenarians, and now, when there’s roughly 4500.
But when it comes to beneficiaries, it won’t be all cake-bakers and candle-makers.
The above Treasury figures indicate the nation’s aged care sector is primed to enjoy unrelenting growth, and brokers are perfectly positioned to carve off their own meaty chunk.
According to Pen Underwriting Australia’s Frank van Rooy, some 83,000 new beds will be required over the next nine years to service our ageing population.
Yet it’s not just aged care facilities that will receive an influx of patients.
Van Rooy, Pen’s Aged and Community Care Underwriting Manager, says the Federal Government has been implementing policies that encourage people to stay in their own residencies for longer, rather than move to aged care facilities.
“This will lead to increased activity in the home care industry and this is where I believe the real growth will take place,” he says.
Van Rooy adds that the National Disability Insurance Scheme, which will give consumers more input into who provides services, will result in the emergence of smaller home care operators with a personalised touch.
There might be a range of financial products designed to protect the client’s balance sheet, …loss of interest on bonds, and so forth.
Zurich Australia Chief Underwriting Officer Sean Walker is already seeing signs insurers need to evolve home care coverage.
One of the challenges facing insurers, he says, is the wide range of activities home care nurses may feel obliged to undertake when visiting elderly patients.
If they get injured while helping repair a household item, for example, then the insurance coverage lines become blurred.
“It brings into play a much higher level of ambiguity than traditional aged care nursing facilities,” Walker says.
Honing the homes
But living out your golden years at home won’t be for everyone, says Ansvar Insurance Chief Underwriting Officer Richard Wyatt.
Over the next nine years, Australia’s 65-84 age demographic will rocket from 3.1 million to 4.3 million people, and many won’t require high-level care.
Instead, Wyatt predicts an increase in US-style retirement communities, based around a golf course for example, with elderly people moving in while they’re still healthy just so they can be around people of a similar age.
“Then they’ll graduate from being entirely self sufficient, to increasing levels of care, all the way up to palliative care within the same community,” Wyatt says.
As the number of communities and residents grow, so too will the risks that require insurance.
It brings into play a much higher level of ambiguity than traditional aged care nursing facilities.
One growing trend Wyatt has identified is the number of coronial inquests for people who have died in care, due to an increase in both elderly patients and new nursing staff.
It highlights the need to ensure all potential staff are properly screened – no matter how quickly the market grows – as well as ensuring an aged care facility is insured to cover the cost of assisting those inquiries.
“If there are any doubts as to why a resident may have passed away, then that will be investigated. It’s a very strong, well-regulated system,” he says.
Wyatt points out that it’s the strength of the aged care system’s regulations that makes the market so appealing for underwriters in the first place.
“It’s a $17 billion revenue business, generating about $1 billion of profit per annum, predicted for the next five years to grow at 5% compound per annum. So there’s an awful lot of growth,” he says.
Regarding current premium trends, Wyatt says they’re “no different in the care market than they are in the Australian insurance market”.
“Premiums and prices are under pressure. It’s quite an aggressive market as underwriters are looking to utilise their capital. So the trends have been very much downwards,” he says.
“On the property side, the claims experiences are generally very good. They are modern properties, 24/7 occupied, often with sprinklers, well maintained and well run, which is why it’s so attractive.”
Scope of cover
When it comes to emerging insurance products, Pen Underwriting’s Frank van Rooy says as the care market is a mature one, products are usually enhanced rather than invented.
But he adds: “Over the next five years there might be a range of financial products designed to protect the client’s balance sheet, such as a policy that insures against occupancy rates, loss of interest on bonds, and so forth.”
With so much growth within the industry, consolidation and mergers among care providers are becoming increasingly common, and provide a good opportunity to ensure professional indemnity standards are consistent, according to Wyatt.
“A lot of these homes were started by people who cared. They saw the opportunity to look after people,” he says.
“With private equity coming in, you get a lot of consolidation, and then you get differing groups that have their own standards.”
And just as the mining boom required an increase in industry specific facilities to be built and workers to be trained, so too will the baby-boomers, says Solution Underwriting Agency Managing Director Rhys Mills.
“From a professional indemnity perspective … you’ll have an increase in people providing consulting services, whether it be from a management point of view or from a regulatory funding or compliance point of view,” he says. “It’s no different to the mining sector.”
While the liability insurance market is currently “very competitive” according to van Rooy, there are signs that could soon change.
“As the demographic within aged care facilities change from WWII veterans, who never complained, to the baby boomers, who have a blame mentality and the means to presume an action, I can see this sector becoming less competitive,” he says.
So how can brokers best position themselves to take advantage of the sector’s growth rates?
Well, according to van Rooy, it’s imperative you get up-to-speed with the “language and specific needs” of the care industry.
“Aged care providers are very astute buyers of insurance,” he says.
“You must have a solid knowledge of the industry, look for clients that are growing so you can take advantage of the organic growth in that business, and above all, offer great service.”