Ratings agency A.M. Best has maintained its stable outlook on the U.S. health insurance market despite the impacts of the ongoing COVID-19 coronavirus pandemic.
A.M. Best has held its stable outlook on the sector in light of positive market trends that were evident through year-end 2019 and into the first-quarter of 2020.
This includes the U.S. health insurance segment’s trend of strong earnings, strengthened risk-adjusted capitalisation, lower-than-estimated utilisation and medical cost trends, and also the cancellation or postponements of visits for routine care and elective procedures.
“The strong earnings reported by health insurers helped capitalization grow in 2019. In addition, the rate of increase in capital & surplus has outpaced the growth in net premiums written each of the past few years, strengthening risk-adjusted capitalization,” says A.M. Best.
Offsetting some of the tailwinds for the sector, according to A.M. Best, is the potential for an increasing severity of medical claims from the pandemic, a reduction in premiums from layoffs/furloughs from business closures driven by COVID-19, and also potential delays in premium payments from customers.
Away from the underwriting side of the balance sheet, and the ratings agency also notes that health insurers in the U.S. will also be exposed through their investments amid financial market volatility.
Clearly, times are challenging and uncertain for insurers of all types, but for now, A.M. Best feels that headwinds benefiting the U.S. health insurance market are supportive of its stable outlook. Of course, this could change as the global coronavirus pandemic continues to evolve and the financial and economic impact is better understood.