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The impact of Covid on the insurance industry

Why medical institutions claim more than they must

publication date:
February 25, 2022
Tags:
Around 2.7 million people in the U.S. lost their health insurance over a 12-week period in the spring and summer of 2020 during the COVID-19 pandemic.

As for the countries with generous state insurance coverage, the situation is a bit different. The providers of Voluntary Health Insurance (VHI) generally experience a rise in profits.
For instance, in Central and Eastern Europe Covid is often recognized as a highly dangerous disease, and thus covered for by the state only meaning it is outside the VHI plans. Hence companies providing VHI don’t have to pay for expensive Covid treatment and at the same time experience a shrink of usage of all other services which combined leads to the rise in their profit. VHI’s major clients are big companies which were not dramatically affected by Covid, therefore they didn’t need to lay off their employees along with VHI expenses.

Both types of industries (with private and government insurance dominance) are prognosed to experience a lot of postponed expenses as people are going to visit doctors after all. Covid also drew a rise in prices of health services and medication, which will worsen the situation for health insurers after the pandemic.
There is also a shift in the structure of insurance services. Long covid and other consequences on people’s health together with pandemic anxiety and a rise of telemedicine changed the healthcare needs and the insurance plans will have to change too: include more testing, psychologists, post covid check-ups etc.
MainsLab calculated how Covid influenced the biggest insurance companies in Central and Eastern Europe.
The implication of Covid on the insurance industry varies significantly around the globe. In the countries with the domination of the private insurance sector i.e. the US, the effect is difficult to calculate as there is a big rise of costly Covid-related claims and the decline of all the others as many people don’t feel like going to the doctor because of restrictions and social distance protocols.
On top of that, private insurers experienced losses due to the following factors:

  • Many people lost their jobs along with employer-sponsored insurance plans which constitute a huge part of the private insurance sector (e.g. it is around 49.6% of all private insurance in the US in 2021.)
  • People started cancelling their insurance plans as there have been many state health initiatives providing for Covid related cases, while lots of other cases lost their relevance at such turbulent time. As a result, many insurers started shifting their plans towards value based once, which drew significant changes for the whole industry though the final effect is hard to estimate.
Covid
Analytics
Health insurance
Share:
Covid
Analytics
Health insurance

Covid 19

and the impact on losses

Negative

Positive


  • Clinics
  • Aggregated data from 3 insurance companies
  • Current agreements
The frequency of requests
-19,2
Payment per applicant
6,9%
Payment to the insured
-13,6%
-3,1%
-0,6%
-1,5%
-0,5%
-0,6%
-1,0%
-1,3%
-3,2%
-0,6%
-0,9%
-0,3%
-0,9%
Other, self medication
Preventive exams
Gynecology, simple cases
Injuries, simple cases
Spine conditions, simple cases
-4,8%
Common cold
-5,4%
+0,9%
Other, postponed
Neurologist
Osteopath
Dermatologist
Ophthalmologist
Gastroenterology
Dentistry
Number of visits per application
Structure of appeals
+12%
Cost increase
Self medication/ The natural course of treatment
-10,6%
Postponed treatment
-8,6%
May bacfire after the cancellation of social distance protocols
%

8,6

8,6

postponed treatment
decrease in visits

5,4

5,4

%
per department partually reduced the increase in prices for clinics
frequency change

10,6

10,6

%
Extremely positive effect on profitability of health insurers
It may reduce profitability when the frequency of applications returns pre-pandemic
%

12

12

price increase in health care facilities
The data shows that overall the payments to clients decreased by 13.6%. Despite the total requests having decreased by 19,2%, the cost of services became higher, which could negatively affect the future profitability of the insurers. At the moment, such postponed treatment is estimated at 8,6% of total claims.

The most frequently postponed services turned out to be dentistry, gastroenterology, and osteopathy, while the most received services during the pandemic came from cold, spine conditions and gynecology (provided that Covid-related treatment is covered exclusively by the government in the region).