Health Insurance Carriers Industry Profile

Companies in this industry underwrite health and medical insurance policies and administer group hospitalization plans, HMOs, and PPOs. Major companies include Aetna, the Blue Cross and Blue Shield Association, Humana, and UnitedHealth Group, all based in the US, as well as AEGON (the Netherlands) and Allianz (Germany).

Worldwide, demand for private health insurance is rising, especially in developing countries such as India and China, but also in countries with comprehensive government-provided health care. Private health insurance expenditures exceed $1 trillion annually, according to Swiss Re.

The US health insurance industry includes about 1,000 companies with combined annual revenue of about $500 billion and is expected to grow at a high rate in the next two years. Growth drivers include rising health care costs and the expansion of health insurance to some 35-45 million uninsured Americans under the Affordable Care Act of 2010.

COMPETITIVE LANDSCAPE

Demand for health insurance products is driven by the rising costs of medical care. The profitability of individual companies depends on efficient operations and the ability to negotiate favorable contracts with health care providers. Large companies and organizations have advantages in negotiating contracts with health care providers. Small companies can compete successfully by providing special coverage plans as part of government programs such as Medicaid, or for specialized populations. The industry is highly concentrated: the 50 largest companies generate about 75 percent of revenue.

The enactment of the ...