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Industry News - Assurant Health Leaving the Health Insurance Market

Large insurance company Assurant is calling it quits on the health insurance market due to declining revenues. The company’s health insurance division, Assurant Health, is up for sale. Regardless if a buyer is found, Assurant plans to exit the health insurance business by 2016.

Assurant Calling it Quits on Health InsuranceAssurant_leaves_individual_health_insurance_market

The reason for calling it quits in the health insurance market is financially-driven. According to the company’s press release, Assurant Health is estimated to lose between $80 million and $90 million in the first quarter of this year. In 2014, Assurant Health lost $64 million overall. Assurant, which posted $10.4 billion as a company last year, is better known for its home and life insurance business.

According to reporting by Modern Healthcare, the reasons for financial losses are rooted in the Affordable Care Act.

The company attracted sicker-than-average people and was hit by a higher than allowed medical loss ratio in 2014 and also attributed losses on low recoveries from the ACA's insurance risk programs and the policy shift that allowed people to stay in plans that are not compliant with ACA standards.

Will Other Health Insurance Companies Follow Suit?

A natural question is, will other health insurance companies follow suit? This remains to be seen. With Assurant, however, there may have been writing on the wall. Last year’s announcement that Assurant was cutting health insurance agent commissions in 2015 was a big sign that the company was acting aggressively to reduce overhead costs.

On the other hand, Assurant Health entered the ACA exchanges in 16 states in 2015, a sign that their financial evaluation of the market was positive.

While it is impossible to predict the fate of health insurance companies in the new ACA landscape, they are - just like employers - aiming to understand how to profit in the new regulatory environment.

Conclusion

For better or for worse, the Affordable Care Act is having a significant impact on the U.S. health insurance industry. Just like individuals and employers, health insurance companies are playing “russian roulette” new regulatory environment.

Did Assurant Health bet wrong? What do you think of Assurant’s announcement to exit the health insurance market? Leave a comment below.

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