As the 2022 open enrollment season is quickly approaching, many business owners are beginning to turn their attention to forecasting insurance premium adjustments for budgeting purposes. Of course, the question mark this year is how much. Although the severity and extent of the COVID-19 pandemic has been unprecedented in modern times, there are safeguards built into the structure of the insurance industry that are designed to maintain stability during significant loss events. Two key elements provide protection against large financial loss for insurance companies and provide some stability in premiums:
Additionally, the severity of the virus has varied in different regions of the country. As a result, insurance carriers will be affected differently based on the specific demographics of their insured populations. Carriers with large numbers of insureds in some of the country’s hotspots will experience greater claim expenses than carriers insuring greater numbers of insureds in minimally impacted regions.
IMPACTS FROM EMPLOYER-RELATED EXPENSES:
Insurance carriers are also employers and as such, have experienced some of the same pandemic-related business costs as any other business. Added cybersecurity costs, outlays for equipment and software to facilitate their employees alternative work arrangements, etc. will impact their financial bottom line during this event. Even the downturn in equity markets will affect the expected level of return on their investment portfolio.
There is also the potential that some recent virus-related development will positively impact insurance costs, such as the more widespread use of tele-health services. In addition to providing access to care with lower costs, on a long-term basis this development could allow healthcare providers to extend their reach to more remote or less affluent groups of people to expand access to care and improve overall population well-being.
Considering all of these pandemic influences, it is likely that future health insurance premiums will be affected, although the expected range of impact probably won’t be clear until later this year.
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