Close Close
Sign In
Newsletters
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
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Life Health > Health Insurance > Health Insurance

Moody's expects narrower underwriting margins

By Allison Bell

X
Your article was successfully shared with the contacts you provided.

This year should be a decent year for health insurers.

Stephen Zaharuk and other analysts at Moody’s Investors Service have given that assessment in a commentary explaining why the rating agency has decided to describe the outlook for the health insurers as stable.

The major Patient Protection and Affordable Care Act (PPACA) health insurance provisions won’t kick in until 2014, commercial insurers’ Medicare Advantage and Medicaid plans are growing, and health insurers have done a good job at diversifying their companies, the analysts wrote in the commentary.

One source of risk is the effects of high unemployment on commercial plan enrollment, the analysts said.

The analysts said the possibility of an increase in use of medical services is another source of risk.

Consumers have been using less medical care in recent years, and increases in the underlying cost of medical care have moderated, the analysts said.

“Commercial pricing continues to be rational and conservative, as most insurers are building some uptick in medical utilization into their premium rates,” the analysts said. “However, there has been pressure from regulators for insurers to reflect in their premium rates lower utilization trends that are more consistent with recent experience”

This year, “indications of a very severe flu season driving up medical costs in the short term” are a concern, the analysts said.

Because of the clash between the flu and regulators’ push for lower prices, the analysts are predicting that underwriting margins — the gap between premiums taken in and cash paid out — will shrink to between 3 percent and 4 percent for 2013, from 4 percent to 5 percent for 2012.

See also:

NOT FOR REPRINT

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