Medicare Supplement – A Growing but Challenging Market
The number of Medicare beneficiaries continues to grow every year, and this growth creates an expanding Medicare Supplement opportunity. Medicare Supplement is now a $34 billion market, with new sales in 2019 reaching $4.8 billion. This growth along with low barriers to entry has certainly caught the attention of many carriers in the U.S. and convinced them to enter the market.
While a large opportunity lies in front of us for certain, it comes with challenges, some of which have emerged just in the past few years. Recent Gen Re research has determined that even though claims trend and medical costs are trending upward, overall rates are at historic lows in many states. Higher costs and lower premium created substantial increases in loss ratios over the past few years.
In the recent Gen Re Medicare Supplement Market Survey, over three quarters of the responding companies, which are actively selling, stated that their loss ratios increased in 2019.
Over our 30-year history in the Medicare Supplement space, Gen Re has always taken a long-term view. Just taking into account the demographics of our country leads us to believe that the opportunity in this space will continue; however, we also feel that the market is changing quickly and that more attention needs to be focused not just on sales today but the persistency and future loss ratios of the block of business. The keys to long-term success will be sustainable growth and robust in-force block management. Below is an overall look at the industry’s more recent performance.
Gen Re has the expertise and proprietary pricing and marketing tools to assist clients who want to enter the market for the first time, manage an in-force block of business, or complete an exit from the space. Whichever option is relevant to you, we can help.