Insurers Profit Despite The Pandemic

By Consumers For Quality Care, on October 20, 2020

Insurers Profit Despite The Pandemic

A study conducted by Kaiser Family Foundation (KFF) found that many insurers profited despite the coronavirus pandemic.

The study looked at two factors to assess the financial performance of insurers: gross margins and medical loss ratios.

Gross margins are determined by looking at the average amount by which premium income is higher than claims costs. Despite most insurers covering the cost of coronavirus testing, insurers still saw their claims costs fall due to many people delaying care or postponing elective surgeries. As a result, insurers’ margins increased – indicating a profit.

A second method of determining insurer financial performance is to look at the medical loss ratio, which is the percent of premium income that insurers pay in the form of medical claims. Lower medical loss ratios oftentimes mean that an insurer has leftover income.

Unless current patterns shift significantly, KFF predicts that consumer rebates will likely be large in 2021. However, the trends also present challenges for insurers given that the pandemic’s trajectory remains uncertain.