Spiralling cancer care costs impact BF&M earnings
BF&M says earnings are being impacted by soaring health costs, including a spike in the cost of cancer treatment.
President and CEO John Wight said the insurance company basically has seen a reduction in the number of lives covered but increasing severity and associated expenses of health claims.
“In 2012, despite a reduction in total claims paid, the dollar amount spent per individual member increased,” Mr Wight said in the company’s annual report.
“Higher than normal costs for cancer care and transplant-related medical services were the main drivers of this experience.”
Similar concerns were expressed this week by Argus, which told
The Royal Gazette Bermuda’s shrinking population hasn’t translated into a reduction in health insurance rates.
Less people in Bermuda are using more medical services here and overseas, Argus vice president of group insurance Michelle Jackson said.
“As the health insurance industry globally struggles with rising healthcare costs, our focus turns to maximising value whilst creating a unique and caring, customised approach to customer service,” Mr Wight said in the report.
“Despite market pressures, our clients remain the focus of collaborative efforts to combat the unsustainability of this sector.”
The CEO added: “It should, however, be noted that since 2009 our spending on domestic standard hospital benefits (as a percent of total claims spend) has increased.
“In recent years multiple services have been added to the standard hospital benefit package; despite increasing the community rated premium, loss ratios are worsening as evidenced by published actuarial reports.”
Mr Wight explained yesterday that cancer care costs were higher than normal due to increases in length of treatment and related transplant services.
“The primary driver is overseas claims,” he told
The Royal Gazette. “Comprehensive cancer care is often performed overseas.”
He said the worsening of loss ratios was mostly driven by claims severity.
“Looking ahead, forward planning is evidenced by our significant investment in technology and organisational management,” BF&M’s report said. “This positions us well for healthcare's future state, which will command greater efficiencies, innovative options for cost reduction and self-directed choice.”
BF&M said this month it made a $21.5 million profit in 2012 — a return on shareholders’ equity of 10.7% — compared to net income of $32.7 million in 2011.
Short term claim and adjustment expenses increased 16% to $18.2 million and life and health policy benefits decreased 9% to $105.2 million.