The property/casualty insurance industry may have thought it was safe from the effects of the Affordable Care Act, but a new white paper from the Insurance Research Council (IRC) reveals that troubled times may be ahead across vast swaths of the sector.
In report, “The Affordable Care Act and Property/Casualty Insurance,” the IRC posits that incentives and requirements in the ACA may cause hospitals, doctors and other medical service providers to engage in cost-shifting practices targeted toward P/C insurers.
An increased number of claims—as well as fraudulent claims—are also likely as a result of the ACA, as policyholders look to first-dollar coverage from P/C insurance policies as an alternative to high deductibles and large cost-sharing requirements likely to be incorporated into employer health plans.
“Property/casualty insurers are in a changed environment, where medical providers with whom they engage and the claimants they serve are themselves confronted by major changes as a result of the ACA,” said IRC Vice President David Corum.
The IRC did not estimate the cost of these disruptions, but did rate cost-shifting as presenting a “major” potential cost impact, claims shifting as “minor” and fraud as “moderate.”
The majority of the report focuses on potential cost-shifting as a result of the ACA. According to the IRC, the cost-shifting will occur due to “increased cost containment efforts by public and private health insurers,” and will manifest itself in higher charges and higher volume of billed services.
These increased costs may be shifted in turn to P/C clients, and activity will be “particularly severe” in states where health insurance and P/C insurance reimbursement levels are most disparate.
The P/C industry is not the only insurance space expected to feel waves from the ACA. However, in these cases, it may mean good news for producers.
D&O coverage is likely to be a major focus as healthcare organizations face increased scrutiny, according to a 2013 Marsh report. Sales will likely be more expensive for clients, however.
Cyber is another policy to watch in the wake of the ACA. With an influx of new health insurance consumers, data thieves will likely be vying for an illicit part of the prize. This makes solid cyber liability coverage paramount for health data firms.
As other, more major portions of the ACA go into effect—including the employer and individual mandate—the effect on P/C and other subsectors of the insurance industry will likely be increased.
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