Tag Archives: Insurance companies

As globe gallops into vaccine trials, insurers remain unfazed

By Noor Zainab Hussain, Carolyn Cohn and Ludwig Burger

LONDON/FRANKFURT (Reuters) – The world is racing towards a vaccine in record time, stirring public concerns about safety to the extent that nine leading developers have felt compelled to issue a pledge to uphold scientific standards and testing rigor.

Yet, while more than 40 experimental COVID-19 vaccines are being tested on humans, the insurance companies with decades of experience in assessing the risks of clinical trials don’t see anything to be unduly concerned about.

Executives at insurer Allianz and brokers Gallagher and Marsh, among the leading players in clinical trials insurance, told Reuters that premiums had only marginally increased so far in the current pandemic.

They argued there was little structural difference to trials carried out in the past, despite drugmakers around the world competing to shatter the fastest time in history for developing a vaccine, which stands at around four years.

“Rates have been relatively stable. Even this year we have so far seen only moderate price increases on average, with higher price jumps for particularly exposed COVID-19 trials,” said Mark Piazzi, senior underwriter liability at Allianz Global Corporate & Specialty.

This was echoed by David Briggs, managing director, life sciences practice at Gallagher, who said every trial was rated on its methods and the kinds of patients involved.

Gallagher said premiums in Britain, for example, started at about 5,000 pounds ($6,500) per trial.

Total claims limits in policies were typically set at roughly $6-12 million, depending on the country’s rules, according to several insurance companies interviewed by Reuters.

In Britain, for instance, claim limits were usually set at no lower than 5 million pounds, while in Germany the figure was around 10 million euros ($11.8 million).

‘LOSS EXPERIENCE NOT DRAMATIC’

However part of the reason why premiums have not risen as sharply as some people might have expected is that claims from trial are generally uncommon, according to executives. This is because patients have often signed so-called informed consent agreements, they said.

Jim Walters, managing director of Life Sciences & Chemical Group at broker Aon, said such agreements outlined the risks that patients were taking by participating in the trial.

“So, you know, everything from you could have a sore spot on your arm. To you could potentially die. And you know, they would literally go that far in some of these protocols,” he added.

“Those generally tend to hold up in courts and in legal systems around the world. That means that the loss experience coming out of clinical trials is not very dramatic.”

Claims are often limited to circumstances linked to the improper conduct of trials or any wrongdoing, rather than side-effects of the treatment, executives said.

Such have been the worries about the vaccine race among some members of the public, who fear safety standards could slip, that nine developers issued a joint pledge last month to “uphold the integrity of the scientific process”.

ASTRAZENECA TRIAL SUSPENSION

AstraZeneca and Oxford University’s suspension of global Phase III trials of their experimental COVID-19 vaccine early last month due to a participant’s illness brought the risk of side effects in clinical trials to the public fore.

But the insurers said such delays were not unexpected, and could even reflect the extra caution of vaccine developers given the lack of data about COVID-19.

“Side effects always happen with clinical trials, but these are typically mild and expected. It is not very common to delay or suspend trials, it does happen though,” said Piazzi at AGCS, whose main peers in underwriting trials include Chubb, HDI and Fairfax’s Newline.

“Pharma companies and insurers alike are even more careful than usual with COVID-19 trials because there is so much at stake, particularly for the patients’ safety.”

All trials of the vaccine candidate have resumed, with the exception of the U.S. study.

There have been examples in recent memory of drug trials going catastrophically wrong, though.

In 2016, for instance, one participant died and five were hospitalized in a Phase I trial run by French company Biotrial in the city of Rennes, testing an experimental mood brightener made by Portuguese drugmaker Bial.

In 2006, six patients required intensive care after receiving a potential treatment against leukemia and auto-immune disease in London. One was described as looking like “the elephant man” after his head swelled. Another lost fingertips and toes. Germany’s TeGenero, the initial developer of the medicine, folded.

But insurance executives stress such disasters are rare, given the thousands of clinical drug trials being carried out every year.

Walters of Aon, speaking about the 2016 trial, said it was “obviously a horrible situation”.

“But that’s one of very few incidents of really bad loss experience that the industry has faced. So, clinical trial insurance is not hugely expensive. Let’s put it that way.”

(Reporting by Noor Zainab Hussain, Carolyn Cohn and Ludwig Burger; Editing by Pravin Char)

Forest fire insurance costs soar

FILE PHOTO: A group of U.S. Forest Service firefighters monitor a back fire while battling to save homes at the Camp Fire in Paradise, California, U.S. November 8, 2018. REUTERS/Stephen Lam/File Photo

MUNICH (Reuters) – Forest fires are becoming increasingly likely because of climate change and cost insurers more than ever, with the deadly fire that ravaged northern California the single most expensive natural disaster in 2018, Munich Re said on Tuesday.

The California wildfire that devastated the small town of Paradise in November caused losses of $16.5 billion, of which $12.5 billion were insured, according to the reinsurer’s annual catastrophe report.

Worldwide natural disasters caused $160 billion in economic damage in 2018. That was down from $350 billion the previous year, but a number of devastating hurricanes had contributed to the high losses in 2017.

Insurers and reinsurers paid out $80 billion for natural disaster claims last year, down from $140 billion a year earlier but almost double the 30-year average of $41 billion, the reinsurer said.

Munich Re board member Torsten Jeworrek said that 2018 was marked by several severe natural disasters with high insured losses.

“These include the unusual coincidence of severe cyclones in the U.S. and Japan, and devastating forest fires in California,” he said, adding that climate change appears to be making such large fires more common.

Insurers spent $18 billion on two huge fires in the United States in 2018 – equivalent to one in every four dollars they paid out as a result of natural disasters.

Ernst Rauch, the reinsurer’s chief climatologist, told Reuters that forest fires were entering a whole new dimension, costing tens of billions of dollars.

“Higher and higher temperatures are leading to ever greater droughts, and high humidity in the winter means that shrubbery grows quickly, creating an easily flammable material in dry summers,” he said.

Rauch said it was questionable whether areas at high risk could continue to be populated without taking additional measures, such as building houses further from forests and with better safety standards.

In Europe, an unusually hot summer caused a drought that wrought considerable damage on the agricultural sector and was the continent’s most expensive natural disaster at $3.9 billion. However, only a fraction of those losses were insured.

Reinsurers act as a financial backstop to insurance companies, paying a chunk of the big claims for storms or earthquakes in exchange for part of the policy premiums.

Hurricanes and typhoons caused $56 billion of damage last year. Hurricane Michael, which wrought devastation in Florida, was the most expensive for insurers, causing losses of $10 billion.

The review gave no claims figures for Munich Re itself. The reinsurer is due to report fourth-quarter results on Feb. 6.

(Reporting by Alexander Huebner; Writing by Caroline Copley; Editing by David Goodman)

Insurers to pay out record $135 billion for 2017 after hurricanes

The company logo of German reinsurer Munich Re is seen before the company's annual news conference in Munich, Germany, March 16, 2016.

By Tom Sims and Alexander Hübner

FRANKFURT/MUNICH (Reuters) – Insurers will have to pay claims of around $135 billion for 2017, the most ever, following a spate of hurricanes, earthquakes and fires in North America, according to a report published on Thursday.

German reinsurer Munich Re , in its annual natural catastrophe review, also said last year’s total losses, including those not insured, were $330 billion, the second-worst in history after 2011 when an earthquake and tsunami wreaked havoc in Japan.

Although individual events could not be linked directly to climate change, global warming is playing a role, Munich Re said. It expected more frequent extreme events in future.

“We have a new normal,” said Ernst Rauch, head of Munich Re’s Corporate Climate Center, which monitors climate change risks.

“2017 was not an outlier,” he said, noting insured losses have surpassed $100 billion multiple times since 2005. “We must have on our radar the trend of new magnitudes.”

Last year’s hurricanes Harvey, Irma and Maria in the United States and Caribbean, wildfires in California and earthquakes in Mexico destroyed homes, infrastructure and numerous lives.

The disasters also rocked global insurers. Munich Re and Hannover Re both issued profit warnings.

That dealt a blow to a sector already struggling with thin margins, stiff competition and falling prices.

Munich Re’s tally for the industry comes on the back of other estimates that underscored the severity of 2017.

In December, Swiss Re estimated global insured losses from catastrophes would hit $136 billion in 2017, the third-highest on record for the sector, with the United States hardest hit. That figure is not directly comparable to Munich Re’s estimates as it includes man-made disasters.

Reinsurers, which are in the business of insuring insurance, are experts in managing risk and rarely get caught off guard. Analysts have said reinsurers may need to take a fresh look at their risk models as the planet warms and storms become more intense.

A big question for the industry has been whether the run of catastrophes would allow them to achieve higher prices for their coverage, which have been in decline for years.

Early indications suggest modest increases. Global property reinsurance prices rose less than expected in the key Jan. 1 renewal season, with strong competition limiting increases to single digit percentages, brokers said this week.

A turnaround in prices would be the first major reversal since Hurricane Katrina in 2005.

(Editing by Maria Sheahan and Mark Potter)

Trump tells Republicans to get back on healthcare bill

U.S. President Donald Trump calls on Republican Senators to move forward and vote on a healthcare bill to replace the Affordable Care Act in the Blue Room of the White House in Washington,

By Susan Cornwell

WASHINGTON (Reuters) – U.S. President Donald Trump and members of his administration on Sunday goaded Republican senators to stick with trying to pass a healthcare bill, after the lawmakers failed spectacularly last week to muster the votes to end Obamacare.

For the second day running, the Republican president tweeted his impatience with Congress’ inability to deliver on his party’s seven-year promise to replace the Affordable Care Act, President Barack Obama’s signature healthcare bill commonly known as Obamacare. Members of his administration took to the airwaves to try to compel lawmakers to take action.

But it was unclear whether the White House admonishments would have any impact on Capitol Hill, where Republicans who control both houses signaled last week that it was time to move on to other issues.

Republicans’ zeal to repeal and replace Obamacare was met with both intra-party divisions between moderates and conservatives and also the increasing approval of a law that raised the number of insured Americans by 20 million.

Polling indicates a majority of Americans are ready to move on from healthcare at this point. According to a Reuters/Ipsos poll released on Saturday, 64 percent of 1,136 people surveyed on Friday and Saturday said they wanted to keep Obamacare, either “entirely as is” or after fixing “problem areas.” That is up from 54 percent in January.

With the U.S. legislative branch spinning its wheels, the executive branch pledged to look at rewriting Obamacare regulations. Health and Human Services Secretary Tom Price told ABC’s “This Week” that he would change those regulations that drive up costs or “hurt” patients.

Price sidestepped questions about whether there were administration plans to waive Obamacare’s mandate that individuals have health insurance, saying “all things are on the table to try to help patients.”

But Price also told NBC he would implement Obamacare because it is the “law of the land.”

That Obamacare was still law clearly angered Trump, who has no major legislative accomplishments to show for his first half-year in office. “Don’t give up Republican Senators, the World is watching: Repeal Replace …” the president said in a tweet on Sunday morning.

 

NOT ‘TIME TO MOVE ON’

On Friday, Senate Republicans failed to collect enough votes to repeal even a few parts of Obamacare. That capped a week of failed Senate votes on whether to simply repeal, or repeal and replace, the 2010 law, while Trump repeatedly berated lawmakers in a late attempt to influence the legislation.

“The president will not accept those who said, quote, ‘it’s time to move on,'” Kellyanne Conway, a senior counselor to Trump, said on Fox News Sunday. Senate Majority Leader Mitch McConnell, a Republican, had made exactly that comment before dawn on Friday morning after the failed healthcare vote.

The White House budget director, Mick Mulvaney, said on Sunday lawmakers should stay in session to get something done on healthcare – even if this means postponing votes on other issues such as raising the debt ceiling.

“So yes. They need to stay. They need to work. They need to pass something,” Mulvaney said on CNN.

The House of Representatives has already gone home for its August break and the Senate is expected to do the same by mid-August.

Mulvaney also said Trump was seriously considering carrying out threats he tweeted about on Saturday, when the president said that “if a new HealthCare Bill is not approved quickly, BAILOUTS for Insurance Companies and BAILOUTS for Members of Congress will end very soon!”

That tweet appeared to be referring to the approximately $8 billion in cost-sharing reduction subsidies the federal government pays to insurers to lower the price of health coverage for low-income Americans.

The Saturday tweet also appeared to be a threat to end the employer contribution for members of Congress and their staffs, who were moved from the normal federal employee healthcare benefits program onto the Obamacare insurance exchanges as part of the 2010 healthcare law.

“What he’s saying is, look, if Obamacare is hurting the American people – and it is – then why shouldn’t it hurt insurance companies and more importantly, perhaps for this discussion, members of Congress?” Mulvaney said on Sunday on CNN.

Some Republicans have said they are trying to find a way forward on healthcare. Senate Republican Susan Collins, one of three Republicans who voted against repealing parts of Obamacare on Friday, told NBC that Congress should produce a series of bills with bipartisan input on healthcare, including appropriating the cost-sharing subsidies.

The Senate has one vote scheduled when it reconvenes on Monday afternoon: whether to confirm a U.S. circuit court judge. Senate aides said they had no guidance for the agenda beyond that vote.

 

(Additional reporting by Sarah N. Lynch, Roberta Rampton, and Caren Bohan; Editing by Phil Berlowitz and Mary Milliken)

 

How Republicans can hobble Obamacare even without repeal

People march in a "Save Obamacare" rally in Los Angeles.

By Julie Steenhuysen

CHICAGO (Reuters) – Republicans may have failed to overthrow Obamacare this week, but there are plenty of ways they can chip away at it.

The Trump administration has already begun using its regulatory authority to water down less prominent aspects of the 2010 healthcare law.

Earlier this week, newly confirmed Health and Human Services Secretary Tom Price stalled the rollout of mandatory Medicare payment reform programs for heart attack treatment, bypass surgery and joint replacements finalized by the Obama administration in December.

The delays offer a glimpse at how President Donald Trump can use his administrative power to undercut aspects of the Affordable Care Act (ACA), including the insurance exchanges and Medicaid expansion that Republicans had sought to overturn.

The Republicans’ failure to repeal Obamacare, at least for now, means it remains federal law. Price’s power resides in how to interpret that law, and which programs to emphasize and fund.

Hospitals and physician groups have been counting on support from Medicare – the federal insurance program for the elderly and disabled – to continue driving payment reform policies built into Obamacare that reward doctors and hospitals for providing high quality care at a lower cost.

The Obama Administration had committed to shifting half of all Medicare payments to these alternative payment models by 2018. Although he has voiced general support for innovative payment programs, Price has been a loud critic of mandatory federal programs that dictate how doctors should deliver healthcare.

Providers such as Dr. Richard Gilfillan, chief executive of Trinity Healthcare, a $15.9 billion Catholic health system, say they will press on with these alternative payment plans with or without the government’s blessing. But they have been actively lobbying Trump officials for support, according to interviews with more than a dozen hospital executives, physicians and policy experts.

Without the backing of Medicare, the biggest payer in the U.S. healthcare system which Price now oversees, the nascent payment reform movement could lose momentum, sidelining a transformation many experts believe is vital to reining in runaway U.S. healthcare spending.

Price “can’t change the legislation, but of course he’s supposed to implement it. He could impact it,” said John Rother, chief executive of the National Coalition on Health Care, a broad alliance of healthcare stakeholders that has been lobbying the new administration for support of value-based care.

The move Friday to pull the Republican bill only reinforces the risk to the existing law, which Trump said on Friday “will soon explode.”

“It seems that the Trump Administration now faces a choice whether to actively undermine the ACA or reshape it administratively,” Larry Levitt, senior vice president at Kaiser Family Foundation, wrote on Twitter.

“The ACA marketplaces weren’t collapsing, but they could be made to collapse through administrative actions,” he added.

NEW PAYMENT PLANS AT RISK

The United States spends $3 trillion a year on healthcare – more by far than 10 other wealthy countries – yet has the lowest life expectancy and the highest infant mortality rate, according to a 2013 Commonwealth Fund report.

Health costs have soared thanks in part to the traditional way doctors and hospitals get paid, namely by receiving a fee for each service they provide. So the more advanced imaging tests a doctor orders or pricey procedures they perform, the more money he or she makes, regardless of whether the patient’s health improves.

“We have a completely broken economy in healthcare,” said Blair Childs, senior vice president at hospital purchasing group Premier Inc. “Literally, all of the incentives in fee-for-service are for higher cost.”

Alternative payment models are designed to remove incentives that reward overtreatment of patients. Private insurers are on board, with Aetna Inc, Anthem Inc, UnitedHealth Group and most Blue Cross insurers announcing plans to shift half of their reimbursement to alternative payment models to control costs.

To promote the shift to alternative payments, the ACA created an incubator program at the Centers for Medicare Medicaid Services (CMS). The CMS innovation center is funded by $10 billion over 10 years to test payment schemes aimed at improving quality and cutting the cost of care.

The Obama administration’s decision to make some of these payment programs mandatory has drawn the ire of Price, a former U.S. senator and orthopedic surgeon. In response to a mandatory payment program for joint replacements last September, for example, Price charged that the CMS innovation center was “experimenting with Americans’ health.”

In his January 17 confirmation, Price said he was a “strong supporter of innovation,” but said he believed the CMS innovation center “has gotten a bit off track.”

TRUMP SETS WHEELS IN MOTION ON DAY 1

President Trump has already signed an executive order directing the HHS to begin unraveling Obamacare. In the early hours of his presidency, Trump directed government agencies to freeze regulations and take steps to weaken the healthcare law.

The order directed departments to “waive, defer, grant exemptions from, or delay the implementation” of provisions that imposed fiscal burdens on states, companies or individuals. These moves were meant to minimize the costs and regulatory burdens imposed on states, private entities and individuals.

David Cutler, the Harvard health economist who helped the Obama Administration shape the ACA, said Price could do all sorts of things to undermine the law.

“If he wants to blow it up, he can,” Cutler said in an email. But if they do, he added, “they alone will own the failure.”

(Editing by Edward Tobin)