According to analysts at AM Best, health insurers reported record profits during the second quarter of 2020 despite the pandemic, due to deferral of care and an increased reluctance to visit healthcare providers.
The healthcare industry faced many unforeseen challenges and changes in early 2020 due to the onset of the COVID-19 pandemic.
But with lockdown measures imposed around the world, many people elected to defer surgeries and routine care and make fewer visits to hospitals and providers.
These actions were intended to relieve pressure on the health care system and preserve the initial shortages of personal protective equipment (PPE).
During this time, many health insurers also transitioned employees to work-from-home to process claims and inquiries from their members and to maintain business continuity.
In the US, net premiums written increased to $488.3 billion for the first half of 2020, compared to $455.3 billion during the same period last year.
Premiums have been driven by rate increases, growth in enrollment in government-sponsored business, and the return of the health insurer fee in 2020, which is included in premiums.
Year-to-date underwriting income increased 40% year over year to $29.7 billion, the bulk of which came from second quarter 2020.
The net underwriting income for the second quarter 2020 increased to $28.3 from $9.1 billion in the prior year’s period and Q2, with the decline in claims for non-COVID conditions more than offsetting the impact of COVID claims.
With the sizable increase in underwriting earnings through the second quarter, net income increased to a historically high level of $26.6 billion for the first half of 2020 compared to $24.5 billion in the prior year’s period.
But while underwriting earnings improved year over year, investment income was $3.1 billion lower and taxes were $2.9 billion higher, which limited the growth in net income.
Furthermore, AM Best does expect the level of underwriting income to temper in the third and fourth quarter as utilization has picked up since the mid-summer for most states.
