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Sept 2018 Q3

A

Act

Member
Hi,

In Sept 2018 Q3 (i) it says that there will be an 'increased credit risk in respect of care homes used' as a result of moving from fixed benefits to indemnity up to the lifetime cap. Why is there an increased risk here? Is it a risk in terms of care homes defaulting, or care homes performing care to a poor standard? I'm not really sure why this is a risk for the insurer - does it mean that, if care homes perform care to a poor standard then the costs to the insurer will be higher (higher claim costs?)

Thanks!
 
Hi,

I suspect that the Examiner's Report is suggesting that care homes might inflate the cost of care, which would result in higher claim costs for the insurer. This would only affect an indemnity product - not a fixed benefit one.

Anna
 
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