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Care Homes: Insurance Indemnity

Volume 812: debated on Wednesday 19 May 2021


Asked by

To ask Her Majesty’s Government what assessment they have made of the merits of underwriting insurance indemnity for all care homes on an equivalent basis to the National Health Service.

My Lords, the differing indemnity and insurance arrangements for the NHS and for care homes reflect the different systems of securing health and adult social care. For the NHS, there are established indemnity schemes, administered by NHS Resolution. In the care sector, providers purchase insurance from commercial insurance markets. This is a requirement of registration with the Care Quality Commission.

My Lords, due to Covid, many care homes have found insurance prohibitively expensive, hard or even impossible to find, and that which is available often not covering Covid. Yesterday, I spoke to a care home manager who was told that renewing his existing insurance would cost 880% more than the previous year, and just one Covid claim could result in the care home having to close its doors, causing great distress and disruption to residents and their families. Against this backdrop, can the Minister say what plans the Government have to extend indemnity to all care homes for a reasonable period, not simply the small number now covered as part of the designated care site schemes, to put them on an equal footing with the NHS and ensure that they are able to help the NHS during any third wave? Will the Minister agree to meet me to discuss the options?

My Lords, I acknowledge the challenge faced by care homes on the insurance market, but CQC statistics suggest that, in fact, the insurance industry has done an enormous amount to meet the needs of care homes and that many of the pressures on care homes have been the result of Covid outbreaks. We have brought in the designated settings indemnity support, as the noble Baroness knows, and we have given £6 billion to local authorities to support care homes. Putting care homes on the same footing as the NHS would not meet the needs of the care home sector, so that is not something we are looking at currently.

My Lords, the Financial Times warned in January that care homes were having to turn away new patients as they struggled and failed to get liability insurance to cover Covid-related claims. There is also huge speculation that a flood of claims is coming as pre-existing claims management companies and many set up purely to deal with Covid-19 cases are vying for business for personal injury claims and compensation for the loss of a loved one. What assessment has the Minister made of the risk that Covid-related litigation poses to the sustainability of the whole social care sector?

My Lords, in the year from March 2020, the number of patients has in fact increased from 457,000 to 458,000. The CQC is monitoring the situation extremely closely and its data from the insurance industry suggests that, although there has been some pressure on some companies, there have also been new entrants and the amount of support available to the social care sector is resilient.

The Minister has a very good understanding that many of the residents in residential care homes are unable, because of their condition, to comprehend the significance of the coronavirus. At this stage in their lives, when they are at their most vulnerable, many have felt that they have been abandoned and are now unloved. Can the Minister tell the House, if the insurance indemnity is not acceptable, what other possibilities are being considered by the Government so as to ensure that the awful experiences of some residents in the past year will never be repeated?

My Lords, the noble Lord speaks movingly of the plight of many people in care and I agree with his sentiment—it has been a very difficult year indeed—but we cannot blame the insurance industry for the pressures that have been put on residents. On the specific point about residents receiving visitors, which has, I think, been attributed to problems with insurance, I remind the noble Lord that 82.5% of care homes in England are now able to accommodate residents, compared with 40% at the beginning of March—a very large increase.

My Lords, the Minister will be aware that the financial viability of many homes has become precarious during the pandemic. What mechanism is in place to monitor the level of premiums and any homes in danger of closing because of this problem? What contingency measures are in place to care for the residents who might lose their homes as a consequence?

My Lords, in terms of monitoring, Care Quality Commission data indicates that pressures are being felt by the insurance industry, but these are not translating into reduced capacity, service closures or quality concerns. There is, in fact, a growth in the number of home care agencies since March 2020; for instance, in the east Midlands, there has been a growth in capacity of 9.4%. These are reassuring figures and we are monitoring the situation extremely closely.

My Lords, there are still many inconsistencies between the NHS and social care. Specifically, will the Government ensure that there is a level playing field between the two in terms of insurance and indemnity?

My Lords, I do not need to remind the noble Baroness that there are profound inconsistencies between the NHS and social care. They are organised completely differently, and the insurance arrangements reflect that. The noble Baroness is right that we are looking for parity of outcome between the two. That is very much our commitment and this is one area in which we are striving to achieve that.

Many care homes felt that they were thrown under a bus early in the pandemic when, without adequate personal protection equipment in place, the Government transferred infected but untested hospital patients into homes and many otherwise healthy residents were lost through no fault of the homes. As future pandemics may happen, is it not a matter of fairness that care homes and hospices should have their indemnity insurance underwritten in the same way as the NHS does?

The noble Lord is right to point to provisions for the future and for future pandemics—or any future waves. I reassure him that arrangements are in place to ensure the safe transition of patients and residents from the NHS to care home and back again, but that is not a reason to turn the insurance arrangements of the care home industry on their head. Care homes simply cannot have the kind of risk-pooling arrangements that suit major NHS institutions.

My Lords, huge numbers of care homes are very dangerously financially leveraged, having been bought by private equity over the last decade, when at least £1.7 billion was ploughed into these purchases. Interest payments are heavy and insurance payments going up will add to their burden. Can the Minister assure us that before local authorities pay these privately owned, leveraged care homes, the CQC or some organisation will examine the financial stability of individual homes?

My Lords, the financial stability of the care home sector is, as the noble Baroness rightly pointed out, something that we monitor extremely closely. There will, of course, always been new entrants and new departures from such a rich and varied sector. That is not something to be regretted; it brings innovation and new opportunities to the sector. She is right that the potential increase in insurance payments is something that we need to factor in to the finance. That is why we have brought in the designated settlement support scheme and increased the support from local authorities for social care.

My Lords, are there any estimates of how many care homes have gone under because of financial difficulties? How many have been closed down?

My Lords, I do not have the precise number at my fingertips, but I can reassure the noble Lord that the proportion that has gone under in the last year is not dramatically higher than in previous years. We monitor the situation extremely closely. I am aware of the concerns of noble Lords about the financial position of the social care industry and we are taking very careful measures to ensure that we are on top of the financial monitoring situation.