Best’s Market Segment Report: Evolving and Shifting Dynamics in the Health Reinsurance Space

OLDWICK, N.J.--(BUSINESS WIRE)--Aging populations and increased health care needs across developed and emerging markets have contributed to the growth of global health reinsurance in recent years, according to a new AM Best report. However, the increased usage of health reinsurance has been driven by greater claim costs, including more high-dollar claims in the United States, combined with increased utilization.

The Best’s Market Segment Report, “Evolving and Shifting Dynamics in the Health Reinsurance Spaces,” is part of AM Best’s look at the global reinsurance industry ahead of the Rendez-Vous de Septembre in Monte Carlo. Other reports, including AM Best’s ranking of top global reinsurance groups and in-depth looks at the insurance-linked securities, Lloyd’s and regional reinsurance markets, have been published in August and September.

According to this report, global health reinsurers experienced strong growth in 2024, underpinned by rising demand for health protection and morbidity coverage. Accelerated growth in the U.S. health reinsurance market occurred across all product lines, except for Medicaid, driven by primary carriers that need to optimize capital in light of lower underwriting profitability and premium 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.”

Underwriting results in Medicare Advantage, the largest line of business in terms of premium, declined significantly and were driven overall by elevated utilization trends, a reduction in Star ratings and changes to the risk-adjustment payment methodology. Margins and underwriting results in Medicaid managed care also declined, due to re-determinations by the states following the end of the COVID-19 public health emergency. Underwriting results in the fully insured employer group segment also deteriorated, driven by elevated utilization and an increase in medical cost trends. The combined impact has left insurers seeking capital management strategies.

In 2024, ceded premium grew by more than 30% to USD 66 billion, after growing just 9% in 2023. This was the largest single-year increase in premium over the past 10 years and the largest increase since 2022. “The U.S. health reinsurance market has grown in terms of quota share and excess of loss reinsurance arrangements,” said Jon Housel, financial analyst, AM Best. “The volume of ceded health premium has grown significantly over the past 10 years, by more than 350% during that span.”

Global reinsurers continue to prioritize health reinsurance as part of their environmental, social and governance (ESG) initiatives, focusing on improving access to health care, supporting health innovation and managing social risks related to aging and chronic diseases.

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=357553.

A video discussion of this report also is available at http://www.ambest.com/v.asp?v=ambgrhealth825.

For all global reinsurance reports ahead of Rendez-Vous de Septembre, please visit AM Best’s Reinsurance Information center.

AM BestTV will be conducting interviews from Rendez-Vous de Septembre as well. Please visit the event playlist for video interviews on AM Best’s global reinsurance reports, coverage of AM Best’s reinsurance market briefing in Monte Carlo and executive interviews during the conference.

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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2025 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.