The first-quarter 2020 earnings of publicly traded US health insurance companies show that the impact of the COVID-19 pandemic has been less severe than anticipated, according to AM Best.
The rating agency noted that while there have been more than an estimated 1.5 million reported cases of COVID-19 across the US, the majority of the individuals diagnosed have not been hospitalised and have been isolating at home.
For health insurance companies, the decline in medical care for non-COVID conditions has more than offset the impact from COVID-19 claims.
Since the deferral of medical care did not begin until the last few weeks of March, concurrent with the dramatic rise of COVID-19 cases, the impact was not meaningful in first-quarter statutory earnings.
AM Best expects claims to increase in the second half of 2020, as many states re-open and allow providers to schedule elective procedures and conduct routine care office visits, assuming the pandemic subsides.
Analysts expect Q1 2020 earnings will decline year over year, mainly due to the return of the health insurer fee (HIF), which is expensed in full in the first quarter.
Furthermore, claims volumes could decline again if there were to be a second wave of COVID-19, which could again lead to the deferral of non-essential surgeries and visits.
The impact from job losses also has not yet manifested into enrolment decline for health insurance companies, but analysts warned that the risk of these losses increases the longer the COVID-related closures persist.
AM Best is currently maintaining a stable market segment outlook on the U.S. health insurance segment, and will continue to monitor enrolment, premium and new business trends as they develop in Q2.
