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TMCNet:  A.M. Best Special Report: Health/HMO Impairments Decline As Financial Standards Tighten

[January 20, 2014]

A.M. Best Special Report: Health/HMO Impairments Decline As Financial Standards Tighten

OLDWICK, N.J. --(Business Wire)--

Over the five years through December 2013, 20 health insurers or health maintenance organizations (HMOs) are known to have become financially impaired, with the number of impairments following a generally declining trend from year to year, according to A.M. Best Co.'s review of the most recent regulatory data. The impairment count for the period, consisting of 13 indemnity health insurers and seven HMOs, was well below the single-year tally of 33 in 1999.

The frequency rate of impairments for 2009-2012 was well below the historical average for the 15 full years encompassed by this study. The rate declined to 0.30% in 2011 and 2012 from 0.88% in 2009, compared with the historical average of 1.93%. The impairment count spiked to five in 2013, but that includes four members of single group. Impairment frequency, which is the count of impaired HMOs divided by the number of HMOs in the United States, is considered a more consistent measure of comparison over time than the annual number of impaired companies. In part because the annual number of financially impaired HMOs has fallen faster than the total HMO universe has contracted, the annual impairment frequency declined precipitously from 4.35% (nearly one in 21 companies) in 1998 to a low of 0.30% (one in 526 companies) in 2011 and 2012.


To access a copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=220647.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


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