The COVID-19 pandemic caused drastic fluctuations in healthcare when parts of the country and the economy were closed, leading to postponements, postponements and cancellations of procedures and services, creating some uncertainty for accident and health insurance providers and related coverages, says industry sources.
When moving into 2021, uncertainty about the rapid economic recovery and the success of vaccine development could contribute to market challenges.
"Usage decreased most in the business areas where routine services were prohibited by local regulation – dental care in the second quarter is the prime example where non-emergency care for most methods was banned throughout the month of April," said Tim Zawacki, Charlottesville, Virginia-based leading analyst for the insurance industry for S&P Global Market Intelligence.
Accident and health policies, which are often available through employers, vary in what they cover but are typically designed to cover medical and injury-related costs not covered by a conventional health plan, including medical deductibles.
With fewer people seeking medical care due to quarantine and social distance restrictions, claims volume decreased as much as 40%, according to Tim Nimmer, global chief actuary for Aon PLC in Denver.
"There was a period, mostly during the period March-April-May, when various local economies were closed, with dental offices and optician's offices closed. It really had an impact on depressing injury activity," says Rich Fuerstenberg, senior partner at Mercer LLC in New York.
"We saw a decline in claims," says Ken Gumbiner, Head of Accident and Health Sales at Swiss Re Business Solutions in Fort Wayne, Indiana, which provides medical stop loss coverage to commercial customers. "Because we handle claims above a certain threshold, the vast majority of the decline was at the employer level."
Medical stop loss coverage, which covers self-insured employers for catastrophic losses, attaches to different points for each employer, whether it's $ 50,000 or to the six to low to mid-range figures, Gumbiner said. Therefore, the decline in maintenance utilization of medical services, such as dental check-ups and inexpensive office tests and procedures, generally fell below this threshold or extension.
However, insurers did not see a large reduction in premiums as a result. of "many incentives and different rules introduced", according to Doniella Pliss, head of AM Best Co. Inc. in Oldwick, New Jersey. "The premium was not affected, so what the health insurers ended up with was a stable top line and significantly lower claims."
The pandemic left employers in certain unforeseen situations.
Disability was an area where employers had to come up with new solutions, Fuerstenberg said.
"From a disability perspective, if you only need quarantine, it does not normally qualify you for short-term disability," he said, adding that short-term disability applies if you have an illness that prevents you from working.
Employers reacted to the situation differently, and some used some combination of sick leave, vacation or "emergency," Fuerstenberg said. Some employers extended short-term disability plans to include the new circumstance, while other employers set up separate leadership strategies to deal with COVID-19 absence.
As the economy recovers and workers begin to travel again, employers may need to review coverage such as business travel accidents and illness, and leisure travel coverage, says James Walloga, New York-based vice president, Chubb Accident and Health. "With the return to business travel, business leaders are asking questions about their travel exposures, for example: who is traveling, to where and if their current travel risk policy meets their needs," he said.
As the demand for travel insurance increases, it can be seen by some travelers as a "need to have" insurance rather than a "nice to have", Walloga said.
Employers also look at travel coverage in the light of changes in work environments, with many workers moving to remote areas working at home or closer to where they live. "With all these new workplace scenarios, employers are evaluating accident and disease protection that responds to these emerging risk and benefit needs," he said.
Health care utilization began to return to more normal levels during the third and fourth quarters of 2020, sources say, and the industry is trying to predict what 2021 might look like after such an unusual 2020.
"We expect the first quarter of 2020 to look like as the fourth quarter of 2020 of all we have seen so far, “Mr. Aons
Swiss Re Corporate Solutions Mr Gumbiner said that healthcare claims have seen a return to pre-pandemic levels but have not exceeded those levels.
"Our outlook assumes that use will return to normal levels at an industry-wide level by 2021 and in some cases exceeds the long-term trend as patients seek adjourned care, but this is clearly subject to change depending on how the pandemic unfolds," says S&P: s Zawacki.