Gen Re’s 2024 U.S. Medicare Supplement Market Survey summary is out. The annual benchmark report covers Med Supp results and market trends for 2023, capturing sales and inforce data representing 89 companies.

Although the full study is only available to participating companies, we would like to share the key takeaways including business performance, rate increase activity, underwriting practices and distribution patterns.

Mixed-Market Results

Eighty-one percent of companies with open blocks and 64% with closed blocks reported a collective profitability decrease in 2023 compared to 2022 performance. Profit margins averaged ‑6% for open blocks and 3% for closed blocks.

Overall, loss ratios averaged 84% for companies with open blocks, and 77% for closed blocks, an increase from 2022 reported results of 81% and 76%, respectively.

Participating companies reported $14.4 billion of Med Supp inforce premium for 2023, up by more than 2% over 2022. Inforce premium increased 6% for open blocks but declined 3% for closed blocks. Open blocks account for 61% of the total premium inforce and 70% of covered lives. Over 5.6 million covered lives were reported in 2023, similar to 2022 results.

Sales Premium and Lives by Plan Type

Claims and Lapse Rates Dip

The 2023 observed claims trend for open and closed blocks of 2010 plans averaged 8.6% and 12.4% respectively, while the average expected claims trend for 2024 is about 7%. For 1992 plans, the 2023 observed claims trend averaged 6.4%, while the 2024 expected claims trend averaged slightly lower at 6.1%.

• Fifty-two percent of companies with open blocks and 60% with closed blocks reported lower lapse rates in 2023 than in 2022.
• Of the companies with open blocks, 48% reported lapse rates ranging from 6% to 10% for both years.

Diverse Distribution Choices

Over 90% of the companies utilize independent agents to sell Med Supp. The percentage of companies selling direct-to-consumer (D2C) increased from 59% last year to nearly 70% in 2023.

On average, independent agents account for 78% of the Med Supp sold in 2023, while captive agents and D2C distribution channels account for 11% and 10%, respectively.

• Seven companies reported that 100% of their sales premium was sold via independent agents.
• Two companies reported 100% of their sales premium was sold by captive agents, while one company sold D2C exclusively.

Distribution of Sales Premium

Automated Underwriting Uptick

For the purposes of the survey, we defined an Automated Underwriting (AU) platform as a system used to make decisions on underwritten, web-based applications without human involvement. Of the 25 responding companies, more than half (52%) currently use an AU system, while two companies (8%) plan to implement one in the next 24 months.

Companies using an AU system reported that on average, 94% of underwritten applications were directed to their automated system in 2023 (compared with an average 85% of underwritten applications in 2022).

Gen Re has been active in the Med Supp segment for more than 30 years. Our team has the expertise and proprietary pricing and marketing tools to assist insurers who are looking to either enter the market for the first time, manage an inforce block of business, or exit from this space. We are here to assist with whichever option is relevant to you.