Medicare Supplement premiums reach $14.4 billion, says Gen Re survey

Medicare Supplement premiums reach $14.4 billion, says Gen Re survey | Insurance Business America

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Medicare Supplement premiums reach $14.4 billion, says Gen Re survey

Premiums rise 2%, with Plan G leading new sales and claims trends increasing

Reinsurance

By
Kenneth Araullo

Gen Re has published its 2023 US Medicare Supplement Market Survey, which provides an annual overview of new sales, inforce business, performance metrics, lapse rates, claims trends, and rate filings.

The report includes data from 89 companies, with half managing both open and closed blocks of business.

For 2023, participating companies reported $14.4 billion in Medicare Supplement inforce premium, marking a 2% increase from 2022. Premiums from open blocks grew by 6%, while closed blocks saw a 3% decline.

Open blocks accounted for 61% of the total inforce premium and 70% of covered lives. In total, 5.6 million covered lives were reported, similar to the prior year’s figures.

In terms of new sales, Medicare Supplement premiums exceeded $1.2 billion for 2023, reflecting a 1.9% rise over 2022. The number of new covered lives also increased by 1.5%. Plan G remained the dominant choice among policyholders, representing over 70% of new sales premiums and lives.

Business performance for 2023 showed that 81% of companies managing open blocks and 64% of those with closed blocks reported a decline in profitability compared to the previous year. Profit margins for open blocks averaged -6%, while closed blocks averaged 3%.

The average loss ratio for open blocks was 84%, with a range of 70% to 103%, whereas closed blocks averaged 77%, ranging from 48% to 97%.

Observed claims trends for 2023 showed that open blocks averaged an 8.6% increase, while closed blocks averaged a 12.4% increase. The expected claims trend for 2024 is estimated at around 7%.

Lapse rates were lower in 2023 for 52% of companies with open blocks and 60% of those with closed blocks. Among companies with open blocks, 48% reported lapse rates between 6% and 10% for both 2022 and 2023.

The survey also examined underwriting processes. In 2023, 38% of Medicare Supplement applications were underwritten, with 77% of those applications being approved. The average processing time for underwritten applications was four days, and most companies processed these applications within five days.

In 2023, companies handled 165.4 million Medicare Supplement claims, with an average decision time of six days. Claims fraud detection was a priority, with 66% of companies reporting an increase in fraudulent claims compared to 2022.

The most commonly monitored fraud types included durable medical equipment fraud, billing for services not rendered, and telemarketing schemes.

On the distribution front, more than 90% of companies used independent agents to sell Medicare Supplement policies in 2023. Independent agents contributed to 78% of total sales, while captive agents and direct-to-consumer channels accounted for 11% and 10% of sales, respectively.

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