Health and Life Insurers Report Healthy ’04 Profits

Your insurance rates aren’t the only thing in health care on the rise. So are health insurers’ profits.

Health and life insurers reported income that rose 29 percent in 2004 to $38.8 billion, helped by earnings from investments and rising premiums, according to Weiss Ratings Inc. The $8.8 billion increase is the second consecutive rise in annual income.

Investment income rose 4.8 percent, or $6.9 billion, primarily from corporate and bonds, stocks and mortgage loans.

Group health insurance profits grew by 32 percent, or $1.4 billion, the third consecutive year with growing health profits.

Should those profits help hold rates down? They should at least begin to slow the rise.

I think at some point, you will see that the increases will start to flatten, said Jeffrey Schwartz, assistant vice president for Aon Consulting Inc. in Jericho. But there’s always going to be an increase. Costs will go up. The question will be the degree.

Mergers by insurers could be a double-edged sword, providing savings but reducing competition, he said. Fewer players could mean less pricing pressure.

The steepest increase in health or life insurers profits, measured in dollars, came from Metropolitan Life Ins. Co. in Manhattan. Met Life’s earnings rose from $1.5 billion in 2003 to $2.5 billion in 2004.