According to credit rating agency AM Best, the global health reinsurance market has maintained steady growth, although overall demand and utilisation remain lower than in other insurance sectors.
Health insurance claims are generally short-tailed, allowing for flexibility in pricing and limited exposure to catastrophic losses.
AM Best reports that the growing adoption of health reinsurance has been influenced by increasing claim costs, particularly high-value claims in the United States, alongside broader utilisation trends and the effects of an ageing global population
In the US, AM Best notes that the expansion of health reinsurance reflects a combination of capital management needs, margin pressures, premium growth from both membership gains and rate adjustments, and coverage for large claims
During 2024, insurers experienced margin challenges across several lines of business. AM Best emphasises that external reinsurance can help mitigate risk and provide some financial protection when margins are under pressure
AM Best further observes that Medicare Advantage, the largest segment by premium, saw declines in underwriting results, driven by higher utilisation, changes to the risk-adjustment methodology (V28), and reductions in Star ratings
Similarly, Medicaid managed care results declined as states conducted post-COVID-19 redeterminations, while fully insured employer group plans faced increasing costs due to higher utilisation and rising medical trends, including more widespread use of GLP-1 therapies.
AM Best further notes that in Asia, insurers are introducing new products to meet evolving market needs, with reinsurers providing support in product development, pricing, underwriting, and market access.
Globally, AM Best reports that health reinsurance revenue continued to expand through the end of 2024, reflecting rising demand for protection against morbidity-related risks. Reinsurers have adapted to evolving healthcare requirements, supported by long-term trends such as aging populations and ongoing interest in morbidity and living benefit products. AM Best anticipates that continued increases in medical costs and premium growth will sustain demand for health reinsurance.
AM Best highlights that Swiss Re’s health reinsurance revenue grew 4.0% in 2024, making a significant contribution to the company’s life and health segment, which accounts for over 37% of total insurance revenue. Insurance service results in the segment increased 15% year-over-year, indicating potential for continued growth as aging populations drive demand for health protection.
Hannover Re reported a 12.7% increase in morbidity reinsurance revenue in 2024, recovering from a 4.7% decline in the previous year.
AM Best notes that growth was observed across all regions, particularly in Australia and Europe. Within Hannover Re’s life and health segment, revenue rose for morbidity and longevity solutions, while mortality and financial solutions declined, although mortality continues to represent the largest portion of the segment at approximately 39% of revenue. The company expects favourable conditions for financial and longevity products in 2025.
According to AM Best, Munich Re’s health reinsurance premiums increased 32.4% in 2024 following two years of decline, although the combined ratio rose to 100.4% from 90.6% due to higher claims in Canada and the non-renewal of some contracts in China.
Premium growth was strongest in the Asian, South Asian, and Canadian markets, and the company anticipates continued expansion in 2025.
AM Best notes that Reinsurance Group of America’s (RGA) health reinsurance business continues to grow, driven by the US and Latin American markets.
Favourable trends in individual health, technological innovations, and in-force management have contributed to opportunities in the US, while ageing populations have increased demand for living benefit morbidity products. The company also reported growth in traditional reinsurance products in Canada, Asia-Pacific, and EMEA regions.
Finally, AM Best reports that global reinsurers are increasingly incorporating health reinsurance into their environmental, social, and governance (ESG) strategies, focusing on improving healthcare access, supporting innovation, and addressing social risks related to ageing and chronic conditions.
Reinsurers continue to navigate a complex risk environment and regulatory differences across regions while maintaining health reinsurance as a core area of growth.
“In the United States, the rise in health reinsurance is being driven by increased need for capital management, reduced profitability and margin compression in recent years, in addition to premium growth from both membership and rate increases, and protection for high-dollar claims,” said Jennifer Asamoah, Senior Financial Analyst, AM Best. “Health insurers experienced margin pressure across multiple lines of business in 2024.”
