Hospital Indemnity, Critical Illness, Short-Term Care, Dental, and Accident products all provide appealing benefits to retirees and those who do not have access to them through an employer.
Within the individual markets for each of these products, numerous carriers compete for market share. How concentrated are the markets for each of these products? The following shows the percentage of 2023 premium produced by the top 5 carriers:
The individual Dental market exhibits low concentration with the top five carriers making up about a third of the total 2023 premium. Towards the other end of the scale, the relatively young Short-Term Care market saw the top five carriers producing 90% of premium in 2023. Critical Illness, Hospital Indemnity, and Accident products fell in between these extremes.
Is it worth pursuing opportunities in these markets? From a financial standpoint, these products perform well. The premium dollars not spent to pay claims need to cover items such as; administration costs, marketing expenses, and commissions – but these loss ratios generally leave ample room for profit.
Would potential buyers find a new or enhanced product appealing? Have these products reached their ceiling? Historically, total premium for these products has grown by an average of 3.7% each year since 2020 (including 5.1% growth in 2023).
Looking ahead, Telos Actuarial’s product-specific projection models suggest that growth will continue, fueled by growth in the senior population, higher medical costs, increased awareness of the protections provided by ancillary products, and other drivers.