To insurers facing low interest rates and tough new major medical insurance rules, the critical illness insurance market is looking beautiful.
The insurers that participated in Gen Re's latest critical illness issuer survey reported a total of $380 million in 2014 critical illness premium revenue, up 15 percent from the 2013 total.
The number of insurers that agreed to participate in the survey increased 38 percent, to 69. Meanwhile, the number of insurers actively selling products in the critical illness insurance market jumped 34 percent, to 41.
Fifty-percent of the insurers already in the market said they intend to increase their focus on critical illness product sales, according to Steve Rowley, a Gen Re individual products specialist.
"No carriers indicated a decreasing emphasis on the CI line," Rowley wrote in a commentary on the survey results.
A critical illness insurance policy pays benefits to an insured who suffers from a severe health problem, such as cancer or a heart attack.
Health insurers are looking harder at the critical illness market because drafters of the Patient Protection and Affordable Care Act of 2010 (PPACA) and Obama administration regulation writers have exempted critical illness insurance from the underwriting and benefits mandates that now apply to major medical coverage.
Insurers that have focused on long-term care insurance (LTCI) and long-term disability (LTD) insurance are interested in the critical illness insurance market because a critical illness policy typically pays benefits to an eligible policyholder in one lump sum, and the issuer can increase the premiums every year without going through a difficult rate review process.
The current low interest rate climate has also increased interest in the critical illness insurance products, because fluctuations in interest rates affect those products much less than they affect LTCI and LTD products.
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