Monday, February 15, 2010

Premiums Rising - Iceberg Ahead

[Welcome Industry Radar readers!]

No, it is not your imagination. If you are trying to buy health insurance you are going to find it pricier and harder to qualify. Premiums for new health insurance plans are jumping 6% on a quarterly basis in some cases. Renewals on existing major medical coverage for individuals and families are trending at 20% in many cases. Group insurance plans for business owners are looking at 30% increases on renewals and new business rates are also higher.

In addition to higher rates, underwriting of health insurance for individuals and families is getting tougher and taking longer. Health insurance companies are almost routinely requesting doctors records before making a decision on your application and in some cases are refusing to approve coverage if you have not had a physical exam in the last 12 months.

Medical conditions that in the past were either considered a "standard" risk or elicited a nominal upcharge in premiums are now become major stumbling blocks.

We have entered a "hard" market for health insurance.

Many of the economic factors that affect businesses in the mainstream are filtering down to health insurance companies. All health insurance companies are seeing a noticeable drop in enrollment and those who are applying for health insurance are generally in poor health. Those who have individual or family health insurance are dropping coverage altogether if they consider themselves healthy.

What is left on the books are generally those who are sicker which raises claim costs relative to premium income.

Toss in the folks who opted for COBRA that normally would not have if not for the ARRA subsidy and the health insurance companies have a mess on their hands.

Insurance companies that cater to the group health insurance market are seeing participation in COBRA plans double or more. While that block was never profitable, it is even less so now and is gradually becoming a larger portion of their overall block.

In spite of what you may hear from the media and politicians, profits are being squeezed and the only way to maintain financial solvency is to increase premiums and when allowed, tighten underwriting criteria.

Here in Georgia we are seeing rates on the rise and it is becoming more difficult to get an individual or family health insurance policy issued. I would estimate at least 90% of health insurance applications are either denied or issued at something other than standard rates. Some carriers have told us they are rejecting 40 - 50% of applications for coverage.

A lot of those people come to me for assistance. Not too long ago I would review a risk profile for a prospective client, pre-screen that profile with a handful of health insurance companies, and then we could make our choice.

I still do that but I am also finding that I have to submit an application to two or three insurance companies before we get an acceptable offer.

Until the economy turns around, and it is not showing any signs of doing so, anyone looking to buy affordable health insurance in Georgia will be disappointed in how difficult it has become. No amount of rhetoric or tax dollars from Washington will cure our problems until consumers and business owners have confidence in the future of the economy.

When consumers have confidence and the ability to make purchases other than the basic necessities, businesses will start to hire and expand. We don't have a credit crisis, we have a confidence crisis. All of this is spilling over to drive up the cost of health insurance which only serves to fuel political flames.

We still have the ability to help clients find affordable health insurance in Atlanta, but it is just getting more difficult every day.
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