Accidents are Scary but Accident Insurance Doesn’t Have to Be
The air is thinning as you continue your treacherous trek up the mountainside.
Looking in awe at the vast horizon you agree this is worth significantly more than 8 hours of paid time off. With your attention diverted for mere seconds, that next step suddenly lands where it should not. POP! Your ankle is toast, and you can tell it’s more serious than a sprain.
The pain is bearable, but the panic that ensues is not...
You need to go straight to the hospital for x-rays. How much will the ER bill be? You might have to stay overnight in the hospital. Where will your partner sleep? Your beloved golden doodle Buster is staying at a pricey doggie resort. Who will pick him up? Who will take care of him? The list goes on and on…
But then you remember something that brings you peace: You have an Accident policy.
Types of Accident Products
Like the scenario above, the Accident insurance market can seem overwhelming, but Telos is here to help. Accident policies can typically be divided into 3 main categories:
Accidental Death and Dismemberment (AD&D) policies are the simplest type. These products are typically low in premium and high in benefit. Payments are triggered only in the event of a covered AD&D. These forms would typically be filed and categorized as group products.
Accident Indemnity products pay a fixed lump sum in the event of an accident. These products tend to be popular because they offer a variety of straightforward benefits. Covered accidents can range from AD&D to fractures, surgeries, eye injuries and burns. There can even be fixed payments for each day a pet is boarded and lodging expenses for a travel companion.
Accident Expense products can be more complex. These products will cover usual and customary costs associated with all healthcare services resulting from a covered accident, including an AD&D benefit. A wide array of deductible and maximum benefit amounts is typically offered to fit various consumer needs. These products can cover the gaps of a major medical plan or serve as a short-term replacement.
Individual Market Conditions
Let’s continue this journey by focusing on the individual Accident market. Individual Accident products are sold through agents, either captive or independent. Common sales strategies are for these products to accompany a major medical plan or to be sold in a package with other supplemental health coverages. According to data collected from the NAIC Accident & Health Experience Exhibits, insurers in the Individual Accident market earned 2.8 billion in premiums in the year 2022. At the same time, loss ratios for these carriers totaled a mere 31%. The table below displays the top 20 earners in the Individual Accident market over the last 6 years.
Source Data: NAIC Accident & Health Experience Exhibits (Individual Accident), Telos Actuarial Estimates
AFLAC Grp leads the individual market, capturing over 1 billion in 2022 earned premiums. In addition to the 20 parent companies displayed, the market also consists of 119 other companies in 2022. Together, these lower earners still accounted for over 310 million in earned premiums. Among the highest earners in the market, groups such as Globe Life Inc., American Fidelity Corp., and CNO Financial have had extremely consistent growth year over year. The table also illustrates the relatively low barrier to entry within this market. The chart below further shows that there are several insurance groups emerging in the top 20 that have experienced rapid growth over short periods of time.
Source Data: NAIC Accident & Health Experience Exhibits (Individual Accident), Telos Actuarial Estimates
Are you ready to dig deeper into potentially offering Accident products? Telos can help you reach new heights.
Our 2023 Accident 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 opportunities and the market.
Contact us to find out more!
info@telosactuarial.com