A.M.BestTV: U.S. Health CO-OPs Struggle With Viability Issues

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August 19, 2015 2:57 PM EDT

OLDWICK, N.J.--(BUSINESS WIRE)-- In this episode of A.M.BestTV, A.M. Best Assistant Vice President Sally Rosen and Senior Financial Analyst Wayne Kaminski highlight the challenges The Consumer Operated and Oriented Plan (CO-OP) Program is facing as it enters into its second year. Click on http://www.ambest.com/v.asp?v=coops815 to view the video program.

The U.S. health CO-OPs have attracted many insureds but they struggle to control expenses and manage losses.

“CO-OP enrollment for the first-quarter of 2015 was 869,677 compared to 478,152 for the fourth-quarter of 2014,” said Kaminski. “This increase in enrollment on future financial performance is significant, because it demonstrates that interest is growing, along with a better understanding of how these CO-Ops operate. Additionally, for the smaller plans, the increase has allowed them to build up some scale, which is crucial for their viability going forward. However, the CO-Ops are challenged with operating efficiencies that are below par, having combined ratios as a group of over 110%.”

“For some plans it is the loss ratios, claims versus premiums, for others it is the administrative side,” added Rosen. “These higher administrative expense ratios are due to some companies being so small, while some of the larger companies’ first-quarter results were impacted by health insurer fees.”

A.M. Best also recently published a briefing on the state of the U.S. health CO-OP program. To obtain a full copy of this briefing, visit http://www3.ambest.com/bestweek/purchase.asp?record_code=240565.

Recent episodes of A.M.BestTV include:

  • The Unique Risk Exposures of Private Companies: Experts on coverage for private companies discuss risk issues faced by insurers that write directors and officers’ policies, employment practices and related covers: http://www.ambest.com/v.asp?v=private815.
  • Actuaries: Consider The Reasons When Forming a Captive: The final day of the annual Vermont Captive Insurance Association Conference, a panel of actuaries reviews the path from idea to captive start-up, including why sponsors might consider captives and it sometimes may not be the correct solution: http://www.ambest.com/v.asp?v=vcia3815.
  • Captive Regulators Worry About Other Regulators: The second day of the annual Vermont Captive Insurance Association Conference, regulators say mounting layers of regulation are making it more difficult for them to oversee their own captive domiciles: http://www.ambest.com/v.asp?v=vcia2815.
  • Captive Insurance Panel: Domicile Growth, Regulation Add Complexity: The first day of the annual Vermont Captive Insurance Association Conference, a captive insurance panel discusses the current state of captive insurance companies, including developments in regulation and tax considerations: http://www.ambest.com/v.asp?v=vcia1815.

A.M.BestTV covers exclusive A.M. Best information and reports, targeted topics and key developments in the (re)insurance industry every Monday, Wednesday and Friday. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View A.M.BestTV episodes at http://www.ambest.tv.

A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

A.M. Best
Lee McDonald, 908-439-2200, ext. 5561
Group Vice President, Publication and News Services
[email protected]

Source: A.M. Best Company, Inc.


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