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Best's Market Segment Report: AM Best Revises U.S. Disability Outlook to Negative on Expected COVID-19 FalloutAM Best has revised its market segment outlook to negative from stable on the U.S. disability segment, due to ongoing economic uncertainty, an expected increase in claims activity and higher unemployment. A new Best's Market Segment Report, titled, "Market Segment Outlook: U.S. Disability," states that most disability income carriers had reported improved stability, aided by the sustained economic growth and low unemployment rates through year-end 2019, which also helped lower claims incidence rates and increase premiums. However, disability claims are expected to increase somewhat, not just due to the COVID-19 virus outbreak, but also because disability claims typically spike during times when recession is expected; therefore, claims activity will experience at least an interim increase for the first half of 2020. AM Best expects short-term disability claims to rise, but the ultimate impact on long-term disability claims is still an unknown. Additionally, the economy could have multiple compounding negative effects on disability income writers. The low interest rate environment, which recently experienced significant movement, is likely to result in adjustments to lower the discount rate used to price and determine reserving for this business line. Layoffs by employer groups are expected to impact premiums, given the increase in unemployment driven by employer reduction in force or complete closures. Furthermore, new business pricing likely will be adjusted given the decrease in interest rates, with the 10-year Treasury hovering around 1%, which could see result in a hit to sales for the spring season, maybe longer. To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=295668. Market segment outlooks for the U.S. supplemental health and long-term care segments remain stable and negative, respectively, but have been updated to include commentary related to the COVID-19 outbreak. AM Best will continue to monitor its market segment outlooks on major insurance industry segments and individual lines of business, and make updates or revisions as warranted. To view current Best's Market Segment Outlooks, please visit http://www.ambest.com/ratings/RatingOutlook.asp. AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com. Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED. View source version on businesswire.com: https://www.businesswire.com/news/home/20200324005436/en/ |
