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Best’s Special Report: U.S. Health Insurance Industry’s Results Outperformed Expectations in 2020

·3-min read

OLDWICK, N.J., Jun 14, 2021--(BUSINESS WIRE)--A 77% increase in underwriting earnings in 2020 highlights how the U.S. health insurance industry was able to outperform the expected negative impacts from the COVID-19 pandemic, according to an AM Best report.

The new Best’s Special Report, "U.S. Health Industry Outperforms Expectations in 2020," states that the U.S. health companies and health maintenance organizations (HMO) results were driven by a decline in claims utilization. This was due to delayed elective and routine care in all lines of business and by the relatively modest cost of treatment for COVID-19 for the majority of affected individuals.

The health industry recorded its highest level of net premiums written (NPW) in 2020, to $1.1 trillion at year-end 2020, up from $1.0 trillion in 2019, with all lines of business reporting premium growth, including commercial business. The industry reported a total underwriting gain of $41.6 billion at year-end 2020, compared with $23.5 billion in 2019. The last time the industry had a higher rate of growth in underwriting earnings was in 2017. The health insurer fee (HIF), which was expensed in the first quarter for statutory earnings and totaled more than $15 billion, led to first-quarter 2020 underwriting gains of just under $1.5 billion. However, the second quarter saw the largest underwriting earnings—over $25 billion—related primarily to the delay in medical claims/utilization in all lines of business owing to the pandemic. Underwriting earnings in the third and fourth quarters declined from the second quarter, due to a second wave of COVID-19 cases in the latter part of 2020.

Underwriting income in the commercial business increased by approximately 33%, to $15 billion in 2020 from $11.3 billion in 2019. Commercial results improved greatly, but by the smallest gain as a percentage compared with other lines of business. Medicare Advantage, the second-largest contributor to total earnings, saw its underwriting income grow by approximately 53% in 2020, to $14.1 billion from $9.2 billion in 2019. Utilization in the segment dropped more significantly than in commercial line, owing to the senior population being more inclined to isolate, and therefore, utilized fewer medical services than the general population. Managed Medicaid reported the highest rate of year-over-year growth in underwriting income, which increased to $7.1 billion, from just $300 million in 2019.

Health insurers entered 2021 with good momentum but are expecting lower earnings as utilization returns to more-normal levels during the year. AM Best expects overall operating results for the industry to remain positive through 2021, but earnings are likely to moderate, as all age groups resume a more normal pattern of medical care consumption amid a release in pent-up demand for delayed care.

To access the full copy of this special report, please visit

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Jeffrey Lane
Senior Financial Analyst
+1 908 439 2200, ext. 5567

Doniella Pliss
+1 908 439 2200, ext. 5104

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Jim Peavy
Director, Communications
+1 908 439 2200, ext. 5644

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