The market for ancillary health products continues to be robust across a wide range of consumers. According to Telos Actuarial, accident products are currently responsible for nearly $7.7 billion of annual earned premium across both the individual and group markets. With their low cost/high benefit relativity and ability to supplement primary health insurance, Accident products will remain a popular choice for consumers. Additionally, due to the low minimum loss ratio requirements, relatively streamlined claims administration, and limited to no underwriting necessary, Accident products have a low barrier to entry for carriers looking to enter the market.
There are three primary types of Accident products sold in today’s market:
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An indemnity product that pays a fixed dollar amount for services related to an accident.
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An accident expense product that pays usual and customary charges for emergency room, hospital, and doctor visits due to an accident.
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A simple, small benefit product that pays in the case of accidental death and dismemberment.
The group variety of Accident products are often sold to employers through benefit brokerages and voluntary enrollment is then offered to employees. Individual Accident products are commonly sold through captive and independent agents, commonly marketed as coverage alongside a major medical policy or within a package of several supplemental coverages. Additionally, individual Accident products can often be found within the voluntary worksite market.
To ensure that their Accident products are appealing to both consumers and agents, many carriers eschew the use of underwriting. By streamlining the sales process, it becomes attractive for agents to want to offer the coverage and efficient for consumers to obtain the coverage. In lieu of underwriting, it is common for carriers to use rating factors, commonly in group/worksite products, to adjust premium rates according to the risk being taken.
Additionally, Accident products are regulated by the individual state insurance departments. Most states currently treat these products as supplemental health insurance with requirements based on the various NAIC model laws. Typical loss ratio requirements range from 50%-60%, with actual recent experience coming in between 30% and 40%, depending on the market.
The Accident market is a mature market that enjoyed steady premium growth between 2014 and 2019, averaging around 4% annually. Like most sectors of the insurance industry, 2020 and 2021 introduced volatility into the Accident market, leading to lower growth in those years. However, it is anticipated that the Accident market will return to solid annual growth rates moving forward.
Are you ready to dig deeper into potentially offering Accident products? Our Accident Insurance Market Opportunity Report is available to get you started. It provides a big picture view of the market including product overviews, key competitors, and market projections. The report is designed to quickly get you up to speed on the opportunity and the market.