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Life Health > Health Insurance > Health Insurance

Consumer Reps Wonder If Supplemental Health Products Are Too Profitable

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Increased interest in supplemental health insurance products has revived a long-running debate: whether loss ratios for some of the products are too low.

Members of the Consumer Liaison Committee, an arm of the National Association of Insurance Commissioners (NAIC), heard a presentation on the topic during a recent in-person session.

(Related: Minnesota Criticizes Three Credit Life Insurers)

The NAIC is a Kansas City, Missouri-based group for state insurance regulators.

The NAIC developed its consumer liaison program to give representatives for consumer groups, patient groups and similar groups a voice in NAIC proceedings. The NAIC helps some participate by paying their travel expenses. Other consumer reps pay their own way.

Jackson Williams, a health policy lawyer who spent three years at the Center for Medicare and Medicaid Innovation, and is now director of regulatory affairs at Dialysis Patient Citizens, told members of the Consumer Liaison Committee that some issuers of some products — such as accidental death and dismemberment (AD&D) insurance, specified disease and products classified as “individual other medical”  — spend and average of less than 50% of the premiums on benefits, according to a meeting summary.

The committee put the summary in a packet for an in-person session set to take place April 8, in Orlando, Florida, at the NAIC’s spring national meeting.

The average loss ratio for individual “other medical” products seems to have fallen to about 40% in 2017, from 67% in 2009, Williams told the committee.

The drop indicates that the product “lost a quarter of its value in that time period,” Williams said, according to the summary.

Williams said state regulators should check to see whether insurers have met the loss-ratio targets described in product filings.

In the past, insurers have argued that loss ratios are often low for supplemental health products because the overhead costs involved with offering any insurance product look big when compared with a very low premium, and because issuers of some products, such as AD&D coverage or hospital indemnity coverage, have to build up reserves for rare but large spikes in claims.

Williams said at the Consumer Liaison Committee meeting that the loss ratio data he saw gave no explanation for the low product loss ratios for the products with the low loss ratios.


A link to the Consumer Liaison Committee’s spring national meeting packet is available here, under the Meeting Materials tab.

A copy of Jackson Williams’ slidedeck is available here.

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© 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.