2 1 Contemporary Issues in Private Health Insurance Nick Stolk
3 2 A time to keep and a time to throw away (Eccl 3:6) Contemporary Issues in Private Health Insurance has been prepared biennially since The concept was developed to assist those outside the health insurance industry quickly bring themselves up to speed with the key news, regulatory and environmental changes to Australia s private health insurance industry. However, the number of health insurance outsiders has decreased at recent conferences and so it is time to try something a bit different.
4 3 The session will take this slide deck as read and there will be no formal presentation If you are new to PHI... You are especially welcome. There will be an opportunity to ask questions during the session and to talk to health actuaries throughout the Summit. Feel free to send any questions you have after reading the slide deck to the author before or after the Actuaries Summit. Check out the resources listed in Appendix B...and if you are an old hand We will use our time to discuss a number of contemporary issues. Contributors will have 4-5 minutes to present to the audience. I have invited a number of younger actuaries to contribute a prepared presentation. Following each presentation there will be an opportunity for discussion and questions from the floor. Appendix A includes some possible questions and topic areas as a stimulus for the presentations and discussion.
5 4 What s in this slide deck? Private Health Insurance industry structure and statistics Key stakeholders (incl. legislative and regulatory developments) Actuarial interests in private health insurance The April 2013 Premium Round 2012 & 2013 news and events Appendix A: Topics for discussion Appendix B: Suggested resources for further research
6 Industry structure and statistics 5
7 6 The Australian PHI industry is unique Australia s private health insurance system is different from the health insurance systems of many other countries. What is more, it has a number of unusual characteristics which make it different to other Australian insurance markets. The next slides examine some of these unique characteristics, as well as, features of the market structure, distribution channels and recent performance. A number of the slides assume some level of familiarity with the industry. If you are new to PHI I would recommend any of the resources in Appendix B.
8 7 A few key things to understand if you are new to PHI Australia s private health insurance system is based on community rating. Community rating is not defined other than in the PHI Act which says that insurers cannot improperly discriminate due to a range of factors (including age, gender, health status etc.). In practice the community is assessed at the insurer/product/state level. The industry has a range of products with restrictions and exclusions which have been deemed acceptable under the governing legislation. However, some have questioned whether this is discrimination based on health, or indirect avoidance of community rating. The system lies somewhere between pure community rating and risk rating. As you might expect of a voluntary community rated system, the industry continues to grapple with affordability issues, in this case, younger healthier persons are required to support older, typically higher claiming persons. Questions are starting to be asked as to the future of community rating in its current form.
9 8 A few key things to understand if you are new to PHI Health insurance in Australia is voluntary, includes guaranteed acceptance (so an insurer cannot refuse cover to an eligible customer) and portability provisions which allow insurers to transfer between insurers and retain their length of prior service when considering waiting periods. The system is supported by a number of legislative sticks and carrots: The private health insurance rebate provides government support for premiums depending on a policyholder s age and, from 1 July 2012, income levels. Lifetime Health Cover penalises consumers who delay taking out health insurance until after age 30 by applying a loading to their premiums. Medicare Levy Surcharge tax legislation which imposes a tax on those earning incomes above a certain level if they do not hold a suitable level of health insurance. The community rated system is supported by risk equalisation which transfers quarterly payments between insurers based on varying shares of actual claim payments of claimants with certain characteristics. For further detail see PHIAC Annual Report (link in Appendix B).
10 9 The Australian Private Health Insurance Industry At 30 June 2012 there were 35 private health insurers (ahm deregistered 1 July 2012). Nine insurers operate on a for-profit basis representing 67.8% of FY12 premium revenue. However the use of the term for profit insurer can be misleading: BUPA, Australian Unity, Grand United Corporate & Doctors Health are each part of a mutual organisation; Medibank Private (incl. ahm) is government owned; NHBA is owned by a charitable trust; NIB and health.com.au are potentially the only true for profit insurers. Together the five largest insurer groups hold 83.2% market share (total policies). The next five largest insurers hold a combined 10.2% market share. The remaining insurers each have less than 1% market share (and in aggregate g hold 6.6% of the market). Appendix B contains a useful summary of the market by insurer.
11 10 The Commissioner s Report According to the PHIAC Commissioner (the PHIAC Chair) The industry retained its strong prudential position throughout A year of encouraging signs Development of value-add services by some insurers (including chronic disease management programs and telephonic health services); Expansion into significant new commercial opportunities for the industry; Emergence of new competition with the entry of first start t up for six years; Continuing steady growth of the number of people covered supported by strong and measured capital management. but some growing areas for concern Marked growth in number of policies sold with an excess or exclusion. Increase in proportion with exclusions is cause for concern. Full cover products have reached their price/value limit. Issue is reputational risk for the industry. Insurers need to communicate clearly and effectively.
12 11 PHI participation While the industry has grown with overall population growth it has also increased its penetration into a number of age cohorts, most notably and % 50% 40% 30% Hospital treatment participation by age cohort Jun-00 Jun-12 Growth varies by insurer (see next slide). 20% 10% 0% Total
14 13 The rise of products with an excess PHI is often discussed in the news on affordability grounds. Excesses are one way to lower premiums. 100% 90% 80% 70% 60% 50% 40% Percentage of policies with excess/copayment It is interesting to note that the majority of policies sold have an excess or copayment and have done so since at least % 20% 10% 0% Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Excess/Copay Insurer 1 Excess/Copay Insurer 2 Excess/Copay Insurer 4 Excess/Copay Insurer 5 Excess/Copay Small insurers Excess/Copay Australia
15 14 The rise of products with 100% 90% 80% exclusions 70% and/or Percentage of policies with exclusions and/or restrictions restrictions 50% 60% Increasing attention ti is also given to product value. There are a range of consumer views on policy exclusions. Some people don t want to pay for things they don t need, others believe exclusions undermine their cover. 40% 30% 20% 10% 0% Exclusion/Restriction Insurer 1 Exclusion/Restriction Insurer 2 Exclusion/Restriction Insurer 3 Exclusion/Restriction Insurer 4 Exclusion/Restriction Insurer 5 Exclusion/Restriction Small insurers Exclusion/Restriction Australia Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep- Mar- Sep-
16 15 Industry cost pressures/drivers Health costs have and are expected to continue increasing at levels higher than the general CPI. Claims inflation in PHI is no different and hospital and medical costs typically increase at 6-8% p.a. Health cost pressures Health spending is 9.4% of GDP (AIHW) Technological advances Less invasive, more expensive medical procedures/treatment techniques Prostheses and other devices Pharmaceuticals An ageing population Community expectations Health insurance cost drivers Private hospital contracting Increasingly public hospitals looking to PHI as funding source Preferred provider networks Success of broader health cover? Customer expectations/awareness, media reporting leading to increased utilisation
17 16 FY07 FY08 FY09 FY10 FY11 FY12 Industry HIB premium ($m) 11,127 12,189 13,078 14,170 15,421 16,721 financial performance The net margin (or underwriting margin) is the most common measure of profitability in the industry. While the industry results show relatively ea eystable abenet margin performance, the smaller insurers, can and do exhibit significant variability. Benefits 9,432 10,385 11,349 12,227 13,161 14,337 Expenses (1,079) (1,290) (1,316) (1,328) (1,410) (1,572) Net margin Investment & other revenue (9) Surplus 1, ,175 1,456 1,269 Tax (66) (69) (81) (222) (296) (240) Surplus after tax 1, ,160 1,029 GMR 15.2% 14.8% 13.2% 13.7% 14.7% 14.3% MER 9.7% 10.6% 10.0% 9.2% 9.1% 9.4% Net margin % 55% 5.5% 42% 4.2% 32% 3.2% 45% 4.5% 55% 5.5% 49% 4.9% Profit margin % 11.0% 4.1% 2.5% 6.7% 7.5% 6.2% Net margin % y Industry low (12.4%) (10.9%) (13.0%) (9.6%) 0.0% 0.0% Industry high 18.4% 40.0% 11.3% 15.7% 14.0% 13.4% GMR = gross margin ratio = (premium less benefits) / premium MER = management expense ratio = expenses / premium
18 17 FY12 financial performance ($m) by open status and by profit status At an aggregate level there is little evidence to suggest an insurer s open status impacts their profitability. Based on FY12 net margin performance, the not-forprofit insurers appear to target a lower level of underwriting profitability than their for profit counterparts. Open status Industry Profit status Big 5 Restrict Open Profit NFP HIB premium 13,716 1,308 1,697 16,721 11,333 5,387 Benefits 11,757 1,144 1,435 14,337 9,588 4,748 Expenses 1, ,572 1, Investment and other income HBF profit 1, , Tax HBF profit after tax , Non-HBF related profit Insurer profit after tax , GMR 14.3% 12.5% 15.4% 14.3% 15.4% 11.9% MER 9.4% 7.2% 10.9% 9.4% 9.9% 8.4% Net margin % 4.9% 5.3% 4.5% 4.9% 5.5% 3.5% Profit margin % (after tax) 5.8% 8.8% 7.3% 6.2% 5.8% 6.9%
19 18 The increase in for-profit funds has allowed for significantly higher dividends to be paid in recent times. Medibank s dividend to the Federal Government has drawn particular scrutiny. See later section on News & Events.
20 19 FY12 financial position ($m) Open status Industry Profit status Big 5 Restrict Open Profit NFP Health benefits fund Assets Cash & interest bearing assets 5, ,157 7,689 4,200 3,488 Equities and property 1, , Other assets 1, ,015 1, Total assets 8,444 1,177 1,493 11,114 6,276 4,838 Industry financial position Total assets The capital adequacy risk multiple is the preferred measure of financial Liabilities Unearned premium liabilities 2, ,995 1,960 1,035 strength in the industry, however, it is Outstanding claims 1, , not published publicly at the insurer Other liabilities Total liabilities 4, ,260 3,529 1,731 Net assets 4, ,854 2,748 3,107 Non - health benefits fund Net assets Private Health Insurer Equity Contributed equity 2, ,625 2, Reserves (2,259) 9 13 (2,237) (2,315) 78 level. As a result I have shown the solvency risk multiple. The respective risk multiples suggest that the for-profit insurers operate a leaner capital structure. Retained profits 4, ,786 2,794 2,992 This is also shown in the return on Total equity at 30 June , ,174 3,061 3,113 equity both groups made a similar Return on equity 17.7% 14.3% 13.4% 16.6% 21.3% 12.0% profit margin in FY12 but on very different capital bases. Solvency reserve 1, ,908 1, Solvency risk multiple
21 20 A new entrant Health.com.au Pty Ltd commenced trading on 16 April They are the first new entrant to the PHI industry since 2006/07. Their CEO has stated that they would focus on providing a highly transparent product that solved people's health insurance needs. 20,000 Health.com.au Pty Ltd utilizes iselect as its primary distribution channel. 16,000 PHIAC made their registration as a health 12,000 insurer subject to a number of conditions for their first three years of operation 8,000 including: i Monthly PHIAC 2 reporting; 4,000 Actuarial sign-off on quarterly 0 PHIAC 2 returns; and Not applying for a transfer of assets. Health.com.au Hospital SEUs March June September December March Hospital SEUs Approx hospital market share 0.25% 0.20% 0.15% 0.10% 0.05% 0.00%
22 21 Stakeholders The following slides briefly discuss: The key stakeholders in the PHI industry The rise of aggregators in the market The PHI regulators IFRS developments A brief look ahead at upcoming regulatory developments
23 22 PHI stakeholders DoHA PHIAC Doctors/ Specialists Private hospitals Actuaries Institute Investment managers PHIO Privacy Commissioner ACCC ATO Prosthesis suppliers Allied health sector Public hospitals Insurers Technology providers Consumer represent n Brokers & aggregators Rating agencies Regulators/Government Providers Others Media Customers/policyholders/members The industry associations are Private Healthcare Australia (21 insurers covering 95.3% of the industry) and HIRMAA (18 insurers, 9.0%). The five largest organisations conduct their contract negotiations directly with private hospitals and medical practitioners; the rest of the industry is served either by the Australian Health Service Alliance (25 insurers) or the Australian Regional Health Group (4). All but the largest insurers use one of 3 health insurance software suppliers: Civica, HAMBS and Paragon21.
24 23 Aggregators A quick web survey reveals at least 11 comparison sites now featuring health insurance Brokers driving up costs SMH, 15 April 2013 This article represents a lot of the recent industry debate Medibank claims: Growth of comparison sites have led to higher premiums Industry-wide surge in advertising costs Haven t changed the dynamics of affordability iselect claims: Increases the size of the PHI market Helped match people to appropriate insurance Is explicit about commissions Funds wouldn t use us if we weren t an efficient form of distribution for their products. iselect, the largest of the aggregators in PHI, has been mooted for ASX listing for some time expected listing in 2013.
25 24 PHI regulation The Private Health Insurance Branch of the Department of Health and Ageing maintains the regulatory framework in relation to policy matters affecting PHI (see PHI-circulars). The Private Health Insurance Administration Council regulates statistical and prudential matters (PHIAC-circulars). The primary legislation governing g private health insurance in Australia a is the Private aehealth Insurance Act 2007, which operates with a number of Rules. The Act sets out the role of PHIAC: To achieve an appropriate balance between three objectives: Fostering an efficient and competitive PHI industry; Protecting ti the interests t of consumers; and Ensuring the prudential safety of individual private health insurers.
26 25 Events at PHIAC (since we last met) During 2011 PHIAC issued one Standard Operating Procedure (Information Acquisition Powers) and amended The Private Health Insurance (Insurer Obligation) Rules 2009 (amendment) to include provision for the new professional standard for Appointed Actuaries on FCRs. During 2012 PHIAC s Outsourcing Standard became law and PHIAC issued its fourth SOP, Appointing an Inspector to a Private Health Insurer. PHIAC initiated consultation on proposed changes to the capital standards applicable to the PHI industry; paper, tech-note. At the time of writing the industry was still waiting for the second round of consultation although PHIAC has indicated that implementation will be pushed back to PHIAC became the primary source of advice to the Minister for Health on premium applications from the April 2013 premium round. The tenure of three PHIAC directors including the Commissioner, expires November 2013.
27 26 PaCU The 2012 Budget provided funding for the creation of a PHI Premium and Competition Unit (PaCU) within PHIAC. Funding is from the industry not the government. PaCU will enhance PHIAC s capacity to: o o o Engage with the industry around products, pricing strategies, premium applications, administrative costs and competition issues; Assist the Government with understanding cost drivers, opportunities for savings under the rebate and competitive pressures; and Support the interests of consumers by fostering increased competition in the industry and increasing the sophistication of the scrutiny of premium increases. Initial discussion paper on competition released late 2012 resulted in 27 submissions from stakeholders. PaCU has identified four priority projects for research and consultation in 2013 portability, risk equalisation, barriers to entry and exclusions & excesses.
28 27 PHIO The Private Health Insurance Ombudsman provides health insurance policyholders with an independent resolution service for health insurance complaints and enquiries. The Ombudsman can deal with complaints from policyholders, health insurers, private hospitals or medical practitioners. PHIO publishes an annual State of the Health Funds Report, quarterly bulletins and manages the privatehealth.gov.au website which provides standard information statements including premiums for the products of all private health insurers. From PHIO media release, 28 March 2013: Private health insurance was very much front of mind for consumers during the reporting period, due to the introduction of income testing of the Australian Government Rebate on private health insurance from 1 July 2012 and the associated publicity campaign to inform members about the changes. This in turn increased the demand for PHIO s information and advice services, with the consumer website receiving its highest number of unique visits in July 2012 since it went live in April 2007.
29 28 IFRS developments In 2011 when we last met PHI was facing an issue with the Contract Boundary the 2010 ED considered PHI to be a longterm contract and would require insurers to project until expected contract/policy expiry. Since that time there has been a (non-binding) Board decision to update the proposal: An additional point would affect contracts whose pricing of premiums does not include risks related to future periods. The contract would not confer any substantive rights on the policyholder when the insurer has the right or practical ability to reassess the risk of the portfolio that the contract belongs to and, as a result, can set a price that fully reflects the risks of that portfolio. This revision is intended to address, amongst others, the concerns affecting PHI. Under the current timetable the new standard will not be fully implemented until 1 January 2018.
30 29 Coming and potential regulatory changes Timing Changes May 2013 budget July 2013 & beyond Potential for further changes to the PHI rebate to be announced. Some lobby groups have proposed the removal of the rebate for general treatment cover. Any amendment is likely to face challenges in being legislated given the September election. The effects, if any, of income testing the PHI rebate on lapses and product downgrades should start to be seen as pre-payments are fully earned and people complete their FY13 tax returns. 1 Jan 2014 Chief Medical Officer to provide his review of natural therapies. Those natural therapies found not to be clinically effective will not be eligible for the PHI rebate. Some uncertainty as to how insurers will respond to any changes for example, some have suggested creating new products at negligible cost Implementation of new PHIAC Capital Standards. While the detail of the draft standards is not yet available the consultation paper foreshadowed d a number of changes including the need for insurers to develop a Capital Management Policy which included integration of risk appetite, pricing philosophy, investment plans linked to capital levels and greater Board engagement.? If legislation is passed, the effects of removing the PHI rebate from LHC loadings.? If legislation is passed, the effects of indexing the PHI rebate to CPI rather than premium increases.
31 30 Actuarial interests in PHI The following slides briefly discuss: Some of the work that actuaries perform in PHI Which insurers employ actuaries The recent work of the Health Practice Committee, an Institute committee designed to support the development of actuarial practice and promote opportunities for members working in health (including PHI). The PHI newsletter
32 31 The Appointed Actuary role The Appointed Actuary (AA) role in health insurance was created in Enhancements to the role and its powers were included in the Private Health Insurance Act PHIAC has supported the AA role to the industry, both in writing and verbally, and has communicated its expectations ti of the role to the profession over time. Under the PHI Act 2007, the AA is required to draw to the attention of the insurer, or of the directors of the insurer, any matter that comes to the attention of the actuary and that the actuary thinks requires action to be taken by the company or its directors to avoid a contravention of this Act. Health insurers are required to notify their Appointed Actuary (AA) of notifiable circumstances. These include but are not limited to changes in premiums, changes in benefits, changes to the business plan, changes to the risk profile, development and changes of the capital management plan and significant business diversification activity. The role of the AA includes certification of methodology and assumptions supporting premium increases; advice on new products, preparation of an annual financial condition report and advice on risk margins, insurance liabilities, investments, and mergers and acquisitions.
33 32 Where do actuaries work in PHI? At the time of writing, there were 13 unique Appointed Actuaries three internal, ten external consultants. Institute members were employed on the staff of 13 health insurers (as per below), as well as, a number of consultancies and PHIAC.
34 33 The Health Practice Committee In June 2011, the Actuaries Institute issued a Professional Standard (PS600) covering financial condition reports for private health insurers and in August 2011 issued an information note on the proposed means testing of the private health insurance rebate. In 2012, the Actuaries Institute issued Practice Guidelines for Pricing and Financial Projections (PG699.01) and Valuation of Health Insurance Liabilities (PG699.02). In conjunction with the Actuaries Institute the committee has been developing relevant public policy and working on ways to promote the work of actuaries working in health. This work has resulted in an increase in the number of Actuaries magazine articles on health related topics, as well as, two radio interviews and a TV appearance. The Health Practice Committee put forward to Council two health focused Part III Pathways to Fellowship. Now approved, the UK ST1 course and the South African Health Insurance course (from 2014) when combined with the Australian PHI CPD course provide an alternative Module 1 of the Institute s Part III program. We know of at least two students who have completed this module.
35 34 The Health Practice Committee The HPC has made submissions to PHIAC s consultation package on risk management, PaCU s consultation on competition and the Senate s inquiry on extreme weather events. The HPC has organised a number of networking events, including a presentation from Peter Broadhead from DoHA on his experience working with actuaries, and is looking at the best way of reaching the increasing membership base in Melbourne. The Committee has been refreshed with some new members over the past year and now also includes representation from PHIAC. Thanks to Ben Ooi, Andrew Gale and Kirsten Armstrong for their contribution to the committee. The HPC continues to support, update and mark the Institute s online PHI education course. The course has been offered since 2007 and is open to all those with an interest in learning more about PHI. The Institute congratulated John Walsh on his appointment as a Member of the Order of Australia for service to the community in the areas of disability and health policy. The HPC congratulated Andrew Gale on being awarded the A M Parker prize for his paper Growing Pains: Selection Effects in Private Health Insurance.
36 35 The PHI newsletter At the Summit the Health Practice Committee s PHI newsletter will celebrate the publication of its 250 th edition. The newsletter exists to promote the role of actuaries to the private health insurance sector by providing a newsletter that is relevant, factual, timely and non-subjective. The PHI newsletter has a circulation of 1,800; more than half of whom are from outside of the Institute, while 20% of readers are from overseas. The newsletter includes sections on Department of Health and PHIAC circulars, Institute health interests, topical news items, forthcoming health events; and reports, publications and technical hints. The newsletter undergoes peer review prior to its publication to ensure that accuracy, quality and probity issues are appropriately addressed. The review panel consists of members of the Health Practice Committee, a PHIAC representative and a Department of Health and Ageing representative. ti
37 The April 2013 premium round 36
38 37 The April 2013 premium round The annual premium round, where all insurers submit their proposed premiums for the following April at the same time for Ministerial approval, has become convention. There is no legislation requiring the process happen in this manner. The premium round and approval process has been the subject of significant discussion in the industry in recent times. Medibank released a paper, The future of private health insurance premium-setting: Seeking integrative solutions, in November Findings from that paper of interest to the author Funds have an incentive to game the current approach in order to maximise profit by pricing up to an expected regulatory threshold. There is also a reduced incentive for funds to minimise management expense since cost savings simply induce the regulator to grant lower premium increases. Denied an incentive to compete on price, funds have responded by competing on their product offerings. Under proposed next steps, Horizon 4: Move to price monitoring regulation [not approval].
40 39 35% 30% 25% 20% 15% 10% 5% This chart demonstrates the historical variability in the premium rate increases over the past twelve years. 0% th percentile IQR (25th - 75th) 95th percentile Min Industry average (published) Max
41 % 7.00% 6.00% Premium increases by insurer April 2013 Industry average = 5.60% For profit average = 5.99% NFP average = 4.79% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00%
42 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 10% 1.0% 0.0% April 2013 premium rate increase by insurer category 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 10% 1.0% 0.0% Shaded bars represent for profit insurers. 41 MPL BUPA HCF HBF Healthguard NIB AUHL GUC GMHBA Westfund Latrobe H'Partners HIF Peoplecare CUA St Luke's Mil Health QCH ldura NHBA.com CDH TFH Defence CBHS QTUH RT Police Navy DHF Phoenix ACA Transport HCI RBHS Big 5 Open Mid Tier Restricted Access Big 5 avg Open Mid Tier avg Restricted avg Industry average
43 42 e % Premium m rate increas 9.00% 8.00% 7.00% 600% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Premium rate increase % vs industry surplus before tax and abnormals ($m) Industry surplus before tax and abnormals excluding investment and other income (FY) Investment and other income (FY) Rate increase (April) 2,500 2,000 1, , ore tax and ab bnormals ($M M) Industr ry surplus bef
44 43 The author s understanding of the 2013 premium round process (PHIAC s approach) APRIL 2013 PREMIUM APPLICATION PROCESS MARKET CONDITIONS INSURER CREDIBILITY MATERIALITY PHIAC TESTING CLOSER LOOK Is the insurer operating in a competitive market YES NO Close to their target net margin in PHIAC's view (based on high level checks) PHIAC forms a view on acceptable net margin * Is the requested increase materially lower than historical gross margin inflation? NO Is the projected net margin close to or less than PHIAC's estimated sustainable net margin? NO REQUEST FURTHER INFORMATION NO YES YES PRUDENTAL SAFETY CHECK YES PRUDENTAL SAFETY CHECK YES ACCEPT (PHIAC HAPPY TO DISCUSS DIFFERENCES WITH INSURERS) ACCEPT (PHIAC HAPPY TO DISCUSS DIFFERENCES WITH INSURERS) YES PRUDENTAL SAFETY CHECK YES ACCEPT * PHIAC did not provide information in our meeting on the process they followed if the insurer was considered to not be operating in a competitive market.
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