Best’s Market Segment Report: Changing Trends Continue To Push Up Demand for Health Reinsurance

The recent global rise in healthcare utilization and the prospect of increasing medical inflation have potential to expand the role of health reinsurance, according to a new AM Best report.

The Best’s Market Segment Report, “Changing Trends Continue To Push Up Demand for Health Reinsurance,” is part of AM Best’s look at the global reinsurance industry ahead of the Rendez-Vous de Septembre in Monte Carlo. Other reports, including AM Best’s ranking of top global reinsurance groups and in-depth looks at the insurance-linked securities, Lloyd’s, health and regional reinsurance markets, will be available during August and September.

This new report states that from a global perspective, health reinsurance premium levels continue to rise, but that pace has moderated in the past three years. Recently, this increase was driven by the commercial and stop-loss segments. “Health insurance remains one of the faster growing segments in the global insurance industry, and accounts for approximately half of the premiums generated,” said Doniella Pliss, director, AM Best. “However, the role and global volume of health reinsurance are still relatively modest compared with other reinsurance segments.”

According to the report, the need for health reinsurance tends to be less than for other segments owing to obligations that are typically short-term, pricing flexibility and minimal catastrophe exposure. In the United States, the use of health reinsurance has grown due to lower profitability, a continued increase in high-cost claims, and primary carriers’ need to optimize the capital structure.

Global reinsurers have reported significant health premium growth over the past decade, but the pace has slowed in the past three years. In 2021 and 2022, health reinsurance premiums declined somewhat owing to disruptions caused by COVID-19 in primary health product sales, especially in some emerging markets. Still, positive results have helped offset the losses from COVID-19 mortality claims over the past two years.

“Emerging markets, particularly in Asia, also continue to generate material growth of health reinsurance premium,” Pliss said. “However, the demand for basic health products has moderated due to market saturation, while more sophisticated comprehensive products are still too expensive for mass consumption.”

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=345590.

For future global reinsurance reports ahead of Rendez-Vous de Septembre, please visit Best’s Research.

Lastly, AM Best will host its annual reinsurance market briefing at Rendez-Vous de Septembre on Sept. 8, 2024, at 10:15 a.m. (CEST) in Monte Carlo. For more information, please visit http://www3.ambest.com/rd/rd.aspx?rd=RVDS2024.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

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