Dive Brief:
- Assurant Health has reported losses of $37 million for the fourth quarter of 2014, and total losses of $64 million for the calendar year.
- The insurer blames the large losses primarily on federal policy change that occurred in November 2013, when it was announced that health insurers' 2014 policies wouldn't have to adhere to ACA requirements, and further change in March 2014, when it was announced that consumers could opt to stay in non-ACA-compliant health plans through 2016.
- Assurant Health contends that as a result, not as many young, healthy consumers chose plans that did meet ACA standards, and that their ACA business "had worse morbidity characteristics than we had assumed, and pricing of policies could not be modified."
Dive Insight:
In an effort to protect against further losses from high healthcare costs, Assurant Health began instituting premium increases in January reported to be in the double digits, on average, and "closer to 20%," Modern Healthcare reports. "The loss for the year was disappointing and reflected persistently high ACA claims experience," Assurant CEO Alan Colberg announced.
Further efforts to control costs will include lower commission levels for brokers in some areas.
On the upside of Assurant Health's experience with ACA policy, the hit to the insurer was reportedly cushioned by nearly $400 million in supplemental funding received via risk adjustment and reinsurance provisions.