Best’s Market Segment Report: Group Business Now Driving U.S. Critical Illness Insurance Market

OLDWICK, N.J.–(BUSINESS WIRE)–U.S. group critical illness insurance business has grown more rapidly in recent years as a result of expanding product flexibility, easier policy administration and broker recommendation, and now is outpacing the individual segment, which historically had dominated market sales, according to a new AM Best report.

A new Best’s Market Segment Report, titled, “Group Business Now Driving the Critical Illness Market,” states that the growth in the number of employers offering critical illness is the result of the increasing popularity of voluntary supplemental health products and its unique product design. Recently, it has become more common for brokers to recommend critical illness insurance to employers and for employers to offer some form of this coverage as part of their benefits packages. According to AM Best data, specified/named disease earned premium has increased consistently on an annual basis, growing to $5.8 billion in 2018 from $4.5 billion is 2014. Although the individual and group segments of the business are driving this growth, the majority can be attributed to the latter, which is up more than 90% since 2014.

Critical illness traditionally had been more of an individual product, but the number of group critical illness policies has increased substantially by one-third to almost 4.2 million in 2018 from 3.1 million in 2014. This compares with just 5.3% growth on the individual side, increasing to just under 8 million from 7.6 million policies. The increased use of benefit administration platforms has accelerated the growth, making it easier for employers to offer as many voluntary lines as they want, with no direct cost.

Although the critical illness market remains a highly concentrated segment, with the top five companies accounting for nearly 65% of the market and the top 10 accounting for over 80%, these proportions have decreased in recent years. Furthermore, several companies with historically smaller market shares (i.e., less than 5%) have seen their market share percentage grow in recent years. Given these trends, AM Best expects increasing parity in market share among insurers in the future, especially as more insurers try to capitalize on this mostly untapped and growing group segment.

Viewed as a moderate- to low-risk supplementary product by AM Best, critical illness provides further product and revenue diversification for those carriers in the market. While typically not a core product for most insurers, supplemental health products can be marketed to existing policyholders, improving persistency. Critical illness can be viewed as a favorable component of certain product portfolios where it has potential to decrease overall product expenses, boosting revenues and the ultimate profitability of the company as a whole. Losses are typically not substantial because of the lower face amounts, leading to the possibility of more opportunity than risk if the product is approached appropriately.

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=291120.

A video discussion on the report with Kate Steffanelli, senior financial analyst, and Christopher Lewis, industry analyst, is available at http://www.ambest.com/v.asp?v=criticalillness1019.

AM Best is a global credit rating agency and information provider with an exclusive focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.


Christopher Lewis
Industry Analyst,
Industry Research and Analytics
+1 908 439 2200, ext. 5065
[email protected]

Jason Hopper
Associate Director,
Industry Research and Analytics
+1 908 439 2200, ext. 5016
[email protected]

Kate Steffanelli
Senior Financial Analyst
+1 908 439 2200, ext. 5063
[email protected]

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
[email protected]

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
[email protected]


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