Health Insurers Premium Increases Averaged 10% In 2003

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Accident and health insurers saw increases in premiums narrowly outpacing incurred claims in all but one category, according to 2003 data from National Underwriter Insurance Data Services.

For the top 300 companies, as measured by accident and health lines of business, premiums earned less dividends averaged a 10.1% increase while claims incurred increased 8.1% for an average positive spread of 1.92%.

Premium increases broke out as follows: 2 with increases of over 1,000%; 9 over 100%; 10, between 50-100%; 32 between 25-50%; 70 between 10-25%; 86 between 0-10%; 77 with declines of up to 25%; and, 12 with declines of 25-100%. Two companies went from negative to positive showings in 2003 over 2002.

In general, incurred claims grew as follows: 3 posted 1,000%+ increases; 8, 100%+ increases; 18, 50%+ increases; 20, 25%+ increases; 70, over 10% increase; and, 78, companies had increases of between 0-10%. Declines in incurred claims were also posted by 83 companies that saw claims drop by up to 25%. A total of 17 companies had a decline in incurred claims of 25-100%, and 3 companies had declines of 100% or more.

In the group health category, premiums less dividends grew an average 9% while incurred claims increased 8% in the same 2003 over 2002 time frame, for a positive 1% spread.

The top 300 companies as measured by guaranteed renewable premium had an average year-over-year increase in 2003 of 14% and an increase of 14% for claims incurred resulting in no net change.

Eight companies experienced 1,000%+ increases in guaranteed renewable premiums earned in 2003 compared with 2002.

Fourteen insurers registered premium earned gains of 50%+; 27, 25-50% increases; 44 companies, 10-25% increases; and, 66 companies, 0-10% increases.

A total of 103 companies had up to 25% declines in premium earned; 8 companies, 25-50% declines; and 9 companies, 50-100% declines. Five companies either did not have available data or started with no premium earned in 2002.

Those same top 300 incurred claims as follows: 8 had a 1,000%+ increase over 2002; 6, 500%+; 31 between a 51-100% increase; 17, a 50-100% increase; 32, a 25-50% increase; 40, a 10-25% increase; and, 51, a 0-10% increase.

A total of 68 insurers, had declines of 0-25% in 2003, compared with 2002; 21%, between negative 25-50%; 17 with declines of up to 100%; and, 4 companies with 100% or more declines in claims incurred. Five companies did not have comparable data.

In the non-cancellable category, for the top 300 insurers, premium changes between 2003 and 2002 averaged 8%, a 2% spread over the 6% increase in claims incurred during the same time periods. What must be noted when considering this category is that although some of the percentage changes are sizeable, the 2002 bases are small.

One company, saw premiums earned increase by 3,733% in 2003 over 2002; 6 over 500%; 5 companies had increases of over 100%; 7 companies between 50-100%; 4 between 25-50%; 12 between 10-25%; and, 43 between 0-10%.

Declines in premium earned were posted by companies as follows: 74 companies had declines of 0-25% in premiums earned; 17 insurers experienced declines of between 25-100%; and one company had a 178% decline compared with 2002. The remaining companies either did not have available data or had negative totals for 2002.

Leaders in individual health business lines witnessed an average 10% growth in premiums in 2003 compared with 2002 and a 9% growth in incurred claims for a 1% positive spread.


Reproduced from National Underwriter Edition, August 12, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.