Why Insurers Are Bullish on the Medicare Supplement Market
When reviewing results from Gen Re’s recently released Medicare Supplement Market Survey, the key takeaways that jump off the pages at me are:
- In-force premium increased 8.2% in 2014.
- Sales grew significantly at 17.1%, after a flat year in 2013.
- Lapse rates for the industry were steady again in 2014.
- Loss ratios were lower than the plan for almost half of the market.
Overall, the 80 companies represented in our survey seem to have a lot to feel good about when looking at their 2014 results. Sales rebounded strongly last year, and even though the dramatic increase was driven by a handful of companies, most respondents saw growth year-over-year. Loss ratios continued to stay low, with 45% of respondents reporting that they were lower than 2013.
This means 2014 was generally a positive year, and results like these certainly serve as a big incentive for those carriers thinking about entering the market. Other key highlights worth mentioning include:
- When it comes to plan choices, Plan F continued to dominate the market, with sales accounting for 58% of total premium in 2014, with Plan G being a distant second.
- Even though 80% of the carriers reported selling some of their business through independent agents, we continue to see more carriers selling direct-to-consumer.
The year ahead looks bright for those in the Medicare Supplement market. When asked what they think 2015 will bring, 60% of companies we surveyed responded that they expect their sales to increase by an average growth rate of 16%. Even with this expectation of strong growth among existing carriers as well as interest from new carriers to enter the market, could there be some challenges on the horizon?
Take a look at our recent blog on this medical trend and find out more.
While this expected increase in sales is aggressive for any product, it certainly demonstrates how bullish carriers are about the Medicare Supplement market.
The full report is only available to participants, but you can review our full summary.