Merger and acquisition activity in the insurance industry is common. This has taken place in the disability insurance business and the related medical review company market, both of which have undergone large-scale consolidation in recent years.
Overall Business Challenges
Like many other insurance companies, the disability insurance companies lost great sums of monies invested in mortgage-back securities in 2008 (with Prudential and The Hartford receiving TARP money from the federal government to stay afloat). Many of these companies suffered financial losses stemming from costly commercial real estate investments.
The greater challenge presented is the aging of the United States population. The Baby Boomer generation comprises 25% of the population. The Baby Boomers are becoming disabled at record rates (as well as moving into retirement). This has been the result of the technology gap suffered by older workers who typically are not retrained for new work and get discharged.
Notable Disability Insurer Mergers and Acquisitions
- Unum has acquired several disability insurance companies, including Paul Revere, National Employers Assurance Holding, Colonial Life, and Sun Life Assurance (UK), among others.
- New York Life has acquired Cigna’s disability insurance block after Anthem was unable to do so.
- The Hartford has sold equity stakes to Allianz SE and Berkshire Life
- Lincoln National acquired Liberty Life Assurance Company.
- StanCorp (holding company for Standard Insurance Company) was purchased by Meiji Yasuda Life Insurance Company, which also has substantial holdings in other disability insurers, including Prudential, Aetna, Cigna, Aflac, and Metlife.
Notable Medical Review Company Mergers and Acquisitions
- ExamWorks, Inc. is a subsidiary of holding company, ExamWorks Groups, Inc., which is a large national and international provider of IME services. Its entire operation revolves around the acquisition of other medical review companies in the United States, Canada, and the United Kingdom, including such notable subsidiaries as MLS, Network Medical Review, MES Group, and Matrix Health Management, among many others. These companies provide medical review solely to insurance companies and third-party administrator claim units.
- Genex Services, Inc., was a wholly-owned subsidiary of Unum Corporation before being acquired by venture capital interests in 2007. It has since acquired American Rehabilitation Inc., Professional Diagnostic Management, Intracorp’s workers’ compensation and disability case management business from Cigna, Network Synergy Group, and Med-Eval.
How do Insurance Company Mergers and Acquisitions Affect Your Claim?
The economic challenges faced by disability insurance companies are daunting. Because of the age-related population shift, these insurance companies are faced with an increasing number of claims and a reduced number of premiums being paid. With the consolidation of medical review companies, the cost of external medical reviews will rise due to the lack of competition.
To remain economically viable, disability insurance companies will increase claim denials and claim terminations, while raising premiums as well. In this unfavorable disability claims climate, it is more important than ever that you obtain knowledgeable and skilled legal counsel to help you obtain and your long-term disability benefits.
Don’t hesitate to contact us you are or believe you may experience difficulties getting your long-term disability benefits.
Evan S. Schwartz
Founder of Schwartz, Conroy & Hack