Staff shortages: risk and insurance implications for the care sector

The COVID-19 pandemic has had a devastating effect on the care sector. Every care home is different and many factors will have affected their experience of the past 18 months. But one thing is clear: the issue of employee retention and recruitment in the sector is now critical. According to a new report published by Skills for Care, as of October 2021, the adult social care sector needs to fill over 110,000 job vacancies.  

Key reasons for the current staffing challenges

As the COVID-19 pandemic began to emerge in February and March 2020, residents in many care homes were badly affected and sadly, significant numbers died. At first, vacancy rates actually decreased, likely with fewer jobs available in the wider economy. However, when staff began to test positive, up to half the workforce were soon shielding at home, requiring agency support. 

Hospitality workers began to fill jobs in the sector to help retain staffing levels. However, now that higher paying hospitality roles have to an extent returned, many traumatised workers have left the care sector entirely. Since March 2021, vacancy rates have risen higher than pre-pandemic levels and the use of agencies is once more on the rise. The turnover rate is higher in key support roles including nursing and carers, at 38.2% & 34.4% respectively, while overall turnover rate is 28.5%.

 In addition, the government’s Furlough scheme, supporting jobs in the sector over the past 18 months, has inadvertently placed some staff outside the work force. Brexit has in turn reduced the availability of staff from overseas. A further contributory factor is the compulsory vaccination mandate for workers that came into force 11th November.  The mandate requires all care home workers and anyone entering a care home to be fully vaccinated unless exempt.

Impacts and increased risks for care home providers 

As the pandemic continues to evolve, the implications for the management of care homes are complex. The potential effects of staff shortages have the most significant impact on quality of care but also impact staff and care providers themselves.  

Quality of care:

  • Lack of staff creates significant risks when service users don’t receive the level of care they need, leading to more serious incidents and potentially fatal accidents 

  • Potential increased reliance on agency staff, called on during the first part of the pandemic. Claims may arise from insufficient training on and unfamiliarity with equipment, leading to inadequate care

  • Staff taking on additional roles and responsibilities with which they are unfamiliar and not fully trained may increase the risk of injury to them, and also the service users they care for

  • This could all lead to non-compliance with policies and procedures and an inability to fulfil staffing ratios for service users 

  • Insufficient staffing may result in an increased exposure to acts of violence and aggression from some service users. A decrease in observations to effectively risk assess residents/service users’ needs/changing presentations and inability to keep care plans and risk assessments updated

Impact on staff: 

  • With winter approaching in the UK, the stress on care homes is likely to increase.  Coupled with increasing vacancy rates, this may compound the rate of staff burnout, especially for those already leanly resourced

  • Significantly increased workloads leading to mistakes, corners being cut and fatigue causing inattention could also lead to an increase in claims for workplace stress from staff, due to the challenging environment.  

Impact on care providers:

  • Critical staff shortages can affect the ability of under-resourced homes to continue to provide care and attract new service users. As a result, organisations are in danger of closing down

  • Resourcing issues and reduced quality of staff could have an impact on the likely number of negligence claims

  • Could also result in increased focus from the Regulators (CQC/HSE) with higher numbers of CQC investigations

  • To attract new talent, many care providers are increasing pay rates for staff, especially for nurses and carers. With staffing the largest line of cost for most providers, this puts huge strain on organisations with already thin margins. 

Managing the risks and making sure your insurance protection is robust  

These myriad risks are naturally receiving increased scrutiny from insurers. As the situation evolves, potential insurers are keen to monitor the impact on care sector claims trends and the subsequent potential for significant losses. 

Claims can arise across various different policies, including:

  • Employers Liability

  • Public Liability 

  • Medical malpractice

  • Employment Practices Liability 

  • Directors & Officer’s Liability. 

Robust risk management is critical in mitigating these potential risks and reducing punitive reactions from insurers, if they translate into increased claims frequency and severity. 

Key areas to consider include:

  • Clear and robust incident and claims management reporting procedures, bespoke to the operational structure of your business 

  • Ensuring that major incident response plans are in place 

  • Updated risk assessments reviewed regularly and in line with changing legislation 

  • Well-maintained records relating to employee training, risk assessments and compliance with policies and procedures.

Engage with your broker as early as possible

As the pandemic continues to bring increasing risks to the sector, insurers’ appetite for care sector risks remains selective. It’s clear that rates have been increasing, along with tightening of coverage and reduced capacity across various lines of business. The current industry retention and recruitment challenges will doubtless add to insurer caution. Engaging with your broker early, at least four to five months before renewal, will be critical to a more successful renewal outcome. Now more than ever, the outcome of renewal negotiations will reflect the quality of underwriting information – as well as your relationship with your broker and insurers. 

Talk to the Lockton Healthcare team

At Lockton, our team of experts deal with 50% of the largest UK healthcare providers. Our healthcare team is one of the largest in the UK and our depth of claims and risk management expertise enables us to add value to our clients’ businesses. 

We understand the current uncertainties and we have the solutions to address them. We can help you navigate the evolving situation, working closely with you to identify and address the key risks and insurance issues that could impact you in the coming weeks and months.

Drawing on our in-depth knowledge of the healthcare sector, we ensure that our clients understand exactly what they have – and what they need – in these exceptionally challenging circumstances. 

For further assistance with risk and insurance issues, please visit our Care Capabilities web page (opens a new window) or get in touch using the details below:

Andrew Nicholson, Partner

T: +44 (0)20 7933 2336

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Alex Titmarsh, Account Director

T: +44 (0)20 7933 1375

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