State of the Industry 2011: Insurers' Challenges

When it comes to determining the most significant challenge facing insurers in the next 10 years, Robert Zirkelbach believes it's a matter of taking your pick.

That may be difficult. Beginning in 2011 individual and small-group insurance products must spend at least 80% of premium dollars on medical care and initiatives to improve the quality of care. For large-group policies, the requirement rises to 85%.

In a news release, Weiss cautioned that Congress and state insurance commissioners "should keep a watchful eye on the overall financial health of the industry, while consumers should be especially careful to do business with companies that have the wherewithal to promptly pay claims despite increased costs."

Zirkelbach notes that moderating premium increases has obvious difficulties in an environment in which government can "arbitrarily cap premiums while medical costs are allowed to soar."

As for insurance exchanges and regulations governing medical loss ratios, logistics are unclear at this point. Both are being developed, though it still appears to be too early in the process to understand the specific challenges they will present to insurers.

Achieving administrative standards-identified by 8% of respondents as the biggest test facing the industry-could be an area where common ground is found. Zirkelbach says insurers are ready but providers will also have to do their part in adopting and using new technology.