Big threat to profits will come from rise of claims when deferred medical treatments resume

Early 2020 saw a surge in  travel cancellation claims followed by a surge in Business Interruption Claims. Now a third potential surge looks on the horizon. 

"...a bigger near-term threat to health insurers’ profits is the rise of claims when deferred medical treatments resume. With few claims to pay out but premiums still rolling in, insurers ended up with a blockbuster second quarter. 

At UnitedHealth, net income more than doubled to $6.7bn compared with the year-ago period, as did Anthem’s reported net income of $2.3bn. UnitedHealth shares — after rallying 83 per cent from their March lows — trade on 22 times forward earnings. That is well above the broader S&P 500 healthcare sector’s 16 times. That premium is not solid. 

A hint of what will come is in the insurers’ medical-loss ratios, which measures how much of the premium an insurer collects gets paid out to medical providers. At UnitedHealth, the ratio rose to 81.9 per cent during the third quarter, up from 70.2 per cent in the previous three months. Something similar has happened at Cigna and Humana. 

Regardless of future Congressional inertia, listed health insurers do not price in the return of patients to hospitals. That is a health risk for shareholder portfolios.

Might be time for insurers to look at those health insurance claims processes and follow the lead of travel and BI claims operations that digitally transformed old and manual claims journeys that were not up to the increased volumes of claims.  

The key to rapid, transformational and cost-effective change for the travel and BI insurers has frequently been No Code platforms. 

Incumbent core systems just lacked the flexibility, agility and cost advantages of No Code which makes no demands on overstretched IT developers already struggling to keep core systems running and updated. 

Further reading: "Worried about the resilience of no-code insurance technology? Three reasons not to..."