Aon Study Finds Stability in Nationwide Liability Costs in the Long Term Health C...(e of arbitration forclaims settlement an...),Health

In addition to reviewing trends nationwide, the Long Term Care 2008 General Liability and Professional Liability Actuarial Analysis reviewed 13 states in detail.

Of the profiled states, Alabama, California, Massachusetts, Ohio, Pennsylvania, Tennessee and Wisconsin showed increasing loss cost levels. Other states, including Arkansas, Florida, Indiana, New Jersey, Texas and West Virginia, exhibited stable or decreasing loss cost levels.

Liability costs dropped significantly in states that passed tort reform in the last several years. As a group, the average loss cost of these states (Florida, Georgia, Louisiana, Mississippi, Ohio, Texas and West Virginia) dropped from $7,190 in 1998 to an estimated loss cost of $1,230 in 2005. The loss cost for these states increased only slightly through 2007 to $1,270.

Further, both the frequency and severity of claims decreased in states that have passed tort reform. The number of claims per 1,000 occupied beds for this group peaked at 20.9 in 2002 and has since dropped to 12.2 in 2007. The average claim size plunged from $384,000 in 1998 to $104,000 in 2007.

High cost levels persist in Arkansas, California and Tennessee, where loss costs per occupied bed are multiples of countrywide averages. At $5,460, Arkansas has the highest loss cost of any state. Tennessee has the second highest loss cost at $4,510 and California the third at $3,410. The driving factor for the high loss costs in these states is average severities that are well above the national average. At the top of the list is Tennessee, with a 2007 indicated average severity of $455,000.

In all other states, excluding the thirteen states profiled, the study found that loss costs peaked in 2002 and have increased slightly since 2005. The analysis of claims in all other states indicates that
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