November 17, 2020| By Steve Woods and Mike Fullerton
The number of Medicare beneficiaries continues
to grow every year, and this growth creates an expanding Medicare Supplement
opportunity. Medicare Supplement is now a $34 billion market, with new
sales in 2019 reaching $4.8 billion. This growth along with low barriers
to entry has certainly caught the attention of many carriers in the U.S. and
convinced them to enter the market.
While a large opportunity lies in front of us
for certain, it comes with challenges, some of which have emerged just in the
past few years. Recent Gen Re research has determined that even though
claims trend and medical costs are trending upward, overall rates are at
historic lows in many states. Higher costs and lower premium created
substantial increases in loss ratios over the past few years.
In the recent Gen Re Medicare Supplement
Market Survey, over three quarters of the responding companies, which are
actively selling, stated that their loss ratios increased in 2019.
Over our 30-year history in the Medicare
Supplement space, Gen Re has always taken a long-term view. Just taking
into account the demographics of our country leads us to believe that the
opportunity in this space will continue; however, we also feel that the market
is changing quickly and that more attention needs to be focused not just on
sales today but the persistency and future loss ratios of the block of
business. The keys to long-term success will be sustainable growth and robust
in-force block management. Below is an overall look at the industry’s more
recent performance.
Gen Re has the expertise and proprietary
pricing and marketing tools to assist clients who want to enter the market for
the first time, manage an in-force block of business, or complete an exit from
the space. Whichever option is relevant to you, we can help.
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