Health Insurers Tighten Underwriting

AM Best’s Review & Preview report says the U.S. health insurance segment’s net income fell by nearly 20% through the first three quarters of 2025 versus the same prior‑year period. (news.ambest.com) The report names escalating medical‑cost inflation, higher utilization and rising drug costs — calling out GLP‑1s plus high‑cost cancer, autoimmune and gene‑therapy treatments — and sustained elevated behavioral‑health use as primary drivers of that deterioration. (news.ambest.com) AM Best documents corrective actions taken in 2025, including more‑conservative underwriting and pricing models, insurer market exits, expanded use of value‑based care arrangements and substantive premium rate increases, and it expects those measures to continue into 2026. (news.ambest.com) Sally Rosen of AM Best says insurers will pursue “more‑disciplined growth strategies” and premium adjustments to restore margins, while Joseph Zazzera warns that larger carriers retain capital flexibility but smaller, single‑segment regional carriers have shown operating losses that strain risk‑adjusted capitalization. (news.ambest.com) Market research and vendor analyses published for 2026 show carriers are accelerating investments in AI, analytics and core modernization to enable precision underwriting and workflow automation — capabilities vendors will need to demonstrate with measurable loss‑ratio or expense‑ratio improvements. (forrester.com) (guidewire.com) (cdn.hl.com) InsurTech market reports put total sector value in 2026 in the tens of billions (ResearchAndMarkets estimates roughly $30.24B for 2026), underscoring that buyers are increasingly sizing vendors by measurable ROI and integration capability rather than feature lists alone. (researchandmarkets.com) (insnerds.com)