A spate of natural disasters, an aging American population and increased number of vehicles on the roads have resulted in increasing prices of insurance premiums. Further, a number of mergers in the pipeline have resulted in the firming up of the insurance industry.

Consequently, insurance buyers have been facing extreme price pressure. Under such circumstances, investing in funds with significant exposure to health insurance companies seems prudent.

Higher Prices and Renewals Boost Insurance Sector

Per the latest report published by Willis Towers Watson in their 2019 Insurance Marketplace Realities, players in the insurance industry are poised for tremendous growth. The report attributes the fact to rising pricing pressure on insurance buyers due to a spate of casualty losses.

Experts from Willis Towers Watson also expect the auto liability premiums to continue to increase in 2019, the third year on the trot. The auto rates are believed to surge to anything between 6% and 12% in 2019 as the automobile sector experiences deteriorating loss costs. Such costs result from the ever-increasing number of vehicles on the roads, which has led to a bump up in the number of auto claims.

Looking at the property market, the recent carnage by a spate of natural disasters has resulted in increased prices of claims. For non-catastrophe-exposed programs, pricing is expected increase 2.5%. Meanwhile, pricing for catastrophe-exposed programs is likely to rise between 2.5% and 7.5% in 2019.

Finally, an expanding aging population in the United States has resulted in a higher number of claims from long-term care and senior living facilities. The health insurance renewals are expected to increase between 5% and 30%.

Insurance Mergers in the Pipeline

According to a report published by PwC on Oct 24, 2018, the total value of merger and acquisition activity in America’s insurance sector increased to $8.1 billion in the third quarter of 2018. This marked a steep increase from $1.9 billion in the same period in 2017.