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Moody’s Predicts Mergers of Small Insurers

Moody’s, the well known rating agency, said that healthcare reform will drive smaller health insurance companies to merge and consolidate. Health insurance reform is pressuring companies to reduce administrative costs in response to new minimum loss ratios, that are to take effect on January 1st, 2011.

“Small, local and regional healthcare insurers will find meeting those challenges more difficult in an environment requiring investments in new products and technology. As a result, we anticipate these smaller companies will seek partnerships through affiliations or mergers,” says Steve Zaharuk, senior vice president of Moody’s.

Large health insurance companies, like Anthem Blue Cross Blue Shield of Colorado, United Healthcare, Aetna and Humana are likely to be the most stable companies as we enter this tulmultous period of health care reform.

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