Rate of Medical Inflation Critical to Insurance Industry According to Assured Research

Σάββατο, 25 Οκτωβρίου 2014 01:33

Madison, New Jersey (PRWEB) - While there are still major uncertainties confronting the outlook for national health care expenditures and medical price inflation

, property-casualty insurers should avoid the temptation to reduce the medical trend factors in their reserve development.
“Inflection points matter,” William Wilt, President of Assured Research, a firm that analyzes the property-casualty industry said in a recent report, “and while insurers are generally good at discounting macro trends into their ratemaking and reserving formulas, the health inflation outlook is still too uncertain to presume it will remain as low as it has been for the last few years.”
“We wouldn’t suggest that insurers should build the historic 8-10% medical trend into their reserves, but, should actuaries lower their assumption to today’s low single digit level on the belief that the ACA will keep medical inflation lower-for-longer? No way” he argues, “Why? Because 25 million people are forecast to enter the system over the next two years and we know what increased demand does to prices.”

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