Companies in this industry underwrite health and medical insurance policies and administer group hospitalization plans, HMOs, and PPOs. Major companies include Aetna, Anthem, and UnitedHealth Group (all based in the US), as well as AEGON (the Netherlands), Allianz (Germany), and BUPA (UK).
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 carriers industry includes about 5,100 establishments (single-location companies and units of multi-location companies) with combined annual revenue of about $730 billion.
Demand for health insurance products is driven by cost of medical care. The profitability of individual companies depends on efficient operations and the ability to enter favorable contracts with health care providers. Large companies and organizations have advantages in negotiating contracts with providers. Small companies can compete successfully by specializing in types of coverage or populations. The US industry is concentrated: the 50 largest companies generate about 80% of revenue.
The Affordable Care Act (ACA) has altered the competitive landscape for US health insurance companies. The ACA mandated health care coverage availability for all Americans beginning in 2014; the law also eliminated some common exclusions, such as pre-existing conditions. Managed care companies compete for customers in new government-run health exchanges, where small companies and individuals can buy health care coverage. Many state Medicaid...