The healthcare sector in the US is undergoing a period of rapid and fundamental change presenting re/insurers with many challenges.
This is the finding of a panel of experts said at the Bermuda Captive Conference held in Bermuda this week (Monday June 8 to Wednesday June 10).
Nancy Grey, regional managing director, Aon Risk Solutions, set the scene by illustrating the rapid growth of the use of captives globally in recent years and by pointing out that healthcare is the second biggest user of this risk-transfer solution after financial services. Some 13 percent of all captives formed globally are done so by this sector.
She also noted that while healthcare medical professional liability was the biggest risk transferred by a long way, a growing diversity of risks were being transferred including workers’ compensation, cyber and D&O.
Susan Pateras, SVP, healthcare practice leader, Iron-Starr, went onto put the scale of the US healthcare sector into perspective. She illustrated that a sixth of the US workforce is employed by the sector, which accounted for a spend of $3 trillion in 2014.
She pulled out a few statistics illustrative of its scale including the $8.5 billion spent annually on treating back pain, $40 billion on purchasing drugs, and $17 billion on artificial knees and hips – twice the amount Hollywood takes in the box office annually, he said.
She also highlighted the findings of some studies that suggested that a third of all healthcare cost is wasted or unnecessary. “There is a lack of coordination and huge waste occurring in an industry that is also in a state of transition,” she said. “The healthcare system remains fractured, costly and poorly coordinated approach. The question for re/insurers is how to manage that change.”
She said she believed that integration was the key on many levels. But she also stressed that the risks are changing with new risks emerging on a regular basis.
This story was originally published on sister site Captive International.
US, Insurance, Bermuda Captive Conference, Nancy Grey, Aon Risk Solutions, Susan Pateras, Iron-Starr