Washington Report Finds Adult Family Home Liability Insurance Market Stable

A recent report submitted to the Washington State Legislature evaluates the liability insurance market for adult family homes (AFHs) in Washington. The analysis involved 14,746 policies spanning from January 2019 to September 2024, revealing an annual per-bed premium averaging $424 and a loss ratio at 40%, a figure indicating market sustainability.

Premiums increased from $318 in 2019 to $473 in 2024, aligning with industry standards and not suggesting affordability or availability crises. Washington AFHs, housing up to six residents cared for by licensed caregivers, represent approximately 15% of Medicaid long-term care clients and are mandated by state law to have general and professional liability insurance. Coverage mainly stems from surplus lines insurers and risk retention groups, non-admitted carriers addressing risks beyond the traditional insurance market's scope.

The report indicates that while some AFHs are perceived as higher risk by insurers, overall market conditions do not necessitate the establishment of a government-backed insurance entity. Instead, it offers strategic recommendations to enhance market attractiveness to a broader range of insurers. Key challenges include addressing insurer risk perceptions and balancing affordability for AFH providers operating under tight budget constraints.

Legislative consideration of these factors is anticipated in the 2026 session beginning in January 2026. This report provides critical insights into insurance market dynamics affecting a significant segment of Washington's long-term care system, highlighting regulatory compliance, risk management, and market access issues relevant to stakeholders and policymakers.