Life Insurance

U.S. Life/Health Insurance Impairments Fall By More Than Half In 2020

Two health carriers placed into insolvent liquidation

AM Bests releases its market research on the health of the industry. Access the full report here.

OLDWICK, N.J., April 15, 2021—Four U.S. life/health insurance company impairments occurred in 2020, down significantly from 10 in the prior year, according to a new AM Best special report.

The Best’s Special Report, titled, “2020 U.S. Life/Health Impairments Update,” states that of the four impaired insurers, two were health insurers placed into insolvent liquidation, including an HMO that offered Medicare Advantage plans in New York and a managed care entity that provided coverage for dental services in Michigan.

The remaining two impairments were national accident and health (A&H) insurers in run-off placed into rehabilitation that primarily offered long-term care insurance. Overall, from 2000 to 2020, 179 life/health insurers became impaired. These impairments consisted of 140 insolvent liquidations, 37 rehabilitations—of which 14 were closed during the period and 23 remain open—and two conservation actions. AM Best defines impairments as situations in which a company has been placed, via court order, into conservation, rehabilitation or insolvent liquidation. Supervisory actions undertaken by state insurance department regulators without court order are not considered impairments, unless delays or limitations were placed on policyholder payments.

A&H or health insurers made up 70% of the impairments, according to the report, while 15% were small life insurers that focused primarily on selling lower-value industrial/burial policies or stipulated premium business in the southern United States. The remaining impairments involved fraternal entities, annuity writers, and other life or combined life, annuity and health businesses.

Specific Causes

In the report, AM Best identifies specific causes for 58 of the impairments. The significant challenge of operating as a qualified nonprofit health insurance issuer (i.e., Consumer Operated and Oriented Plans, or CO-OPs) under the Patient Protection and Affordable Care Act (ACA) was the leading cause, with 18 impairments.

Fraud or alleged fraud was the cause of 15 impairments, while eight impairments were caused at least in part by significant investment losses.

Seventy-six life/health insurers became impaired over the 20-year period. These insurers offer a broad array of insurance coverages and investment products, and absent identified impairment causes, are best-considered in terms of the primary lines of business written, split into four components: life, annuity, A&H, as well as companies offering some combination of these. Ninety-seven health insurers became impaired during the study period, involving health insurance written in 42 states, Washington, D.C., and Puerto Rico. The remaining six impairments were fraternal entities.




AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit