Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Health Insurance > Life Insurance Strategies

Health Insurers In 2008: Claims Often Outpaced Premium Growth

Your article was successfully shared with the contacts you provided.

Sitting atop the health insurance business with premiums earned of more than twice the second-place insurer is United Healthcare Insurance Company, which in 2008 had premiums of $32.15 billion, an amount 9.5% greater than the previous year.

In the All Health Insurers category, the three other companies with premiums over $10 billion last year were Humana Insurance Company with $14.03 billion; American Family Life (Columbus) with $13.17 billion; and Aetna Life Insurance Company with $12.59 billion. These three had growth rates, respectively, of 15.3%, 14.6% and 34.2%.

In the case of these four top health insurers, claims incurred outpaced the growth in premium revenue. United’s claims incurred grew by 12.4%, while Humana’s were up 19.3%; AFLAC’s up 23.2%; and Aetna’s up 36%.

All told, 29 health insurers had premiums earned of over $1 billion in 2008, up from 26 the previous year.

Of these 29, the company with the highest growth rate, year over year, was Pennsylvania Life Insurance Company, whose premiums earned rose 170% to $1.78 billion in 2008 from $658 million the year before.

Not every company in this group of 29 showed an increase in premiums last year, however. Nine companies saw a decrease in premiums earned in 2008, with one company essentially flat.

In six of these 9 companies, claims incurred also decreased, but 2 of these companies saw an increase in claims incurred despite a decrease in premiums. They were Bankers Life & Casualty Company and Time Insurance Company, at #19 and #20, respectively, on the All Health Insurers list.

In the Group Health Premiums category, United Healthcare ranks #1 with $24.68 billion in premiums earned, up from $22.75 billion the year before.

All told, 17 insurers had premiums earned of over $1 billion in 2008 in this category, up from 16 in 2007. There were two newcomers to this circle: Golden Rule Insurance at #16 and Lincoln National Life Insurance Company at #17. One company dropped below the billion-dollar mark and that was Union Security Insurance Company.

Of these 17 billion-dollar-plus group health insurers, Connecticut General Life Insurance Company had the highest growth rate. Its group health premiums earned increased 27% to $6.21 billion from $4.89 billion the year before.

Aetna Life at #2 grew by some 14.6 % to $8.9 billion in premiums earned, up from $7.77 billion in 2007.

Only 5 companies of these 17 collected less in premiums earned in 2008 than they did the year before.

In the individual health leaders category, 12 companies had premiums earned of over $1 billion, up from 11 the previous year.

American Family Life is the leader in this category with $13.17 billion in premiums earned. Next is Humana Insurance Company with $10.38 billion, followed by United Healthcare with $7.47 billion.

Rounding out the top 5 here are Aetna Life with $3.69 billion in premiums earned and American Life with $3.18 billion.

The two newcomers to the billion-dollar circle were Pennsylvania Life at # 7 and Pyramid Life at #12. Combined Insurance Company of America’s individual premiums earned fell to $710 million from $1.13 billion in 2007.

In the guaranteed renewable category, American Family Life is the colossus it has been for many years. AFLAC’s premiums earned of $13.17 billion were nearly 7 times the premiums earned of the second-place company, Unicare Life & Health Insurance Company.

AFLAC premiums earned growth rate came in at 14.6% for 2008. But the rate of its incurred claims far outpaced that number at 22.9%.

This pattern of claims incurred outpacing premiums earned held true for the next three largest insurers in the guaranteed renewable category. Unicare’s premiums grew by 24% while its claims went up 34.4%; Anthem Blue Cross Life & Health’s premiums grew by 16.3% as its claims increased by 25.8%; and Mutual of Omaha’s premiums rose by 15.6% while its claims grew by 15.8%.

In the non-cancellable category, American Life Insurance Company at #1 took in over 4 times the amount of earned premiums that second-place Northwestern Mutual did. It is the only company to have over $1 billion in earned premiums in this category.

Growth is generally slower in the non-cancellable area than some others, but there were a number of companies that showed a growth surge last year. Of the 28 companies in this category with over $10 million in premiums earned, the growth pacesetter was Monumental Life Insurance Company, which saw an increase of 188% over the year before. Other companies with large increases were Mony Life, up 78.4%; General Re Life, up 37.7%; and Lincoln National Life, up 36.8%.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.