Best’s Special Report: U.S. Life/Health Impairments Up in 2016 as Affordable Care Act Co-Op Plans Continue to Struggle
The Best’s Special Report, titled, “2016 Life/Health Impairments Update,” states that over a 17-year period from 2000-2016, 155 life/health insurers became impaired. Of these 155 impairments, 72% were accident and health or health insurers, while 15% were small life insurers primarily focused on selling lower policy value industrial/burial or stipulated premium business in the southern
Specific causal factors were identified for 50 of the impairments. The significant challenge of operating as a qualified nonprofit health insurance issuer under ACA was the leading specific cause and was present in 16 of the impairments. Fraud or alleged fraud was present in nine of the impairments, while eight impairments were caused at least in part by significant investment losses. Six companies ran into difficulty after experiencing rapid growth, eight were undone by affiliate problems, and one became impaired after reinsurance failure. One impairment resulted from large claim overpayments due to system errors, and one other impairment involved a mortgage lender that failed after an unlicensed push into fixed rate annuity products.
There were 86 health insurer impairments during the study period. Of these, 76 occurred in companies doing business in one state while another five wrote in two to five states. Other than the nine co-op impairments, a
To access a copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=268721.
To access a copy of the property/casualty impairments special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=268718.
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