NovaRest founder Donna Novak was interviewed for a recent article in The Lund Report, a health news website for the state of Oregon. She discussed the growing scrutiny that Oregon’s insurors are reserving too much capital. Referring to risk-based capital, she told reporter Courtney Sherwood that insurors must place enough in reserves to cover the underwriting risk, which revolves around premium claim levels, and business risk, which revolves around administrative costs.
Novak worked with the National Association of Insurance Commissioners to develop this benchmark which is basically a percentage. The higher the percentage, the readier an insurance company is to withstand an unexpected expense. Regulators want insurance companies to have a risk-based capital ratio higher than 200 percent, Novak says. According to the article, the annual statements filed by 14 Oregon health insurers shows all are beating 200 percent.
The article went on to discuss other risks faced by insurors, including more capital, startup planning and other pressures on reserves. The full article can be viewed here. A subscription is required to view the entire article.
For more information, contact Donna Novak.