The Year 2020, for Agents

4. Long-Term Care Insurance

Fitch Ratings analysts say they believe the long-term care insurance issuers they rate have LTCI coverage exposure levels that are, generally, manageable, but that some issuers continue to base their reserves on “inconsistent and aggressive assumptions tied to discount rates, future premium increases, persistency and morbidity.”

LTCI exposure “continues to threaten the solvency of a number of non-rated issuers,” Fitch says.

5. Health Insurance

Moody’s Investors Service analysts say their 2020 outlook for the U.S. health insurance is stable. The factors they see improving health insurers’ ability pay off their debts include:

U.S. economic growth.

• The growing stability of the Affordable Care Act public exchange plan market.
• Insurers’ focus on controlling medical costs.
• Strong growth in the Medicare Advantage plan market.
• Efforts by health insurers to expand into other sectors, and, possibly, by players in other sectors to expand into health insurance.

Here are some of the factors that the Moody’s analysts see as possibly hurting health insurers:

• Enrollees problems with obesity and other chronic health problems.
• High levels of debt.
• Legal challenges to the current Affordable Care Act-based health care system rules.
• Medicare-for-all proposals and other health system change proposals.

A pure Medicare for All, single-payer health care system plan “would be an existential threat to the industry,” Dean Ungar, a Moody’s vice president, said in an announcement about the company’s 2020 health insurance outlook. “Other proposals, including a limited public option that would be open to participants in the individual market, or a more expansive public option, still would be credit negative, but likely manageable.”

S&P Global Ratings analysts say some of the factors affecting all kinds of U.S. health care organizations, including health insurance organizations are:

• The uncertainty surrounding the U.S. elections.
• Intense pressure to improve operations and cut costs.
• Weaker credit indicators and credit ratings.
• Strong access to capital.

The analysts put out the forecast in November, before President Donald Trump signed the Consolidated Appropriations Act, 2020, and before Sen. Lamar Alexander, R-Tenn., said he had reached a bipartisan agreement over the Lower Health Care Costs Act package. At that time, the analysts said they were not expecting Congress to adopt major, disruptive health care legislation in the next year.

Fitch Ratings analysts say panelists at their recent North American insurance conference reported seeing little support for a single-payer health care system from any of the major players in the system.

6. Travel Insurance

International SOS — a company that sells a variety of travel-related insurance and risk management products and services, including travel medical insurance travel insurance company — says it asked 1,300 business travel decisionmakers about what they think will be the business travel health and security risks in most need of attention in 2020. These were the top three reasons:

1. Risks related to geopolitical shifts.
2. Mental health issues.
3. Physical health issues.

7. Information Technology

The Deloitte analysts expect these factors to drive insurance industry information technology spending in 2020:

• More emphasis on data analytics systems and other systems for improving customer experience, and less on keeping legacy systems alive.
• Efforts to prepare for the possible effects of quantum computing and the new, ultra-fast 5G networks on system security.
• Efforts to prepare systems to take advantage of the opportunities that might be created by the Secure Act.

If the act causes 1% of retirement plan assets to flow into annuities, that could lead to about $57 billion in retirement asset transfers, according to Deloitte estimates.

— Read Bob Doll’s 5 Themes for Stock Investors for 2020, on ThinkAdvisor.

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