Jane Dotson
Rural insurance is a topic that has gained prominence in recent years, with a focus on improving access to quality healthcare services for people in rural areas. This is especially important considering that individuals in rural counties in the United States experience higher rates of uninsurance compared to urban residents, leading to challenges in prenatal and postpartum care, as well as overall health insurance coverage. Texas, for instance, recently merged urban and rural ACA rating areas to increase competition and expand health insurance coverage, resulting in improved plan choices and decreased premiums for rural consumers. The A.M. Best company, a prominent insurance rating source, has also played a role in evaluating rural insurance providers, with Rural Mutual earning an upgraded Financial Strength Rating of A+ (Superior) in 2023, a testament to their strong balance sheet and operating performance. These developments highlight the efforts to enhance insurance options and accessibility for those living in rural regions.
| Characteristics | Values |
|---|---|
| Rating Agency | A.M. Best |
| Previous Rating | A (Excellent) |
| Current Rating | A+ (Superior) |
| Rating Description | Financial Strength Rating |
| Rating Significance | One of only five single-state insurers in the U.S. with an A+ rating |
| Rating Affirmation | Ward's 50 Selection |
| Rating Criteria | Balance sheets, operating performance, business profile, profitability, risk management |
| Rating Impact | Protection and assistance to policyholders during financial loss |
| Rating Context | Rural areas face challenges with access to quality healthcare and higher rates of uninsurance |
| Rating Improvement | Merging rural and urban ACA rating areas improved choice and premiums for rural consumers in Texas |
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What You'll Learn
Rural insurance rating methods
Insurance rating methods for rural areas have been a topic of interest, especially concerning health insurance and access to quality healthcare services for rural residents.
Rural and Urban ACA Rating Areas
Texas recently combined urban and rural areas when categorising rating areas for plans sold on the Affordable Care Act (ACA) Marketplace. This change aimed to increase competition, expand choice, and better align premiums with costs. The previous approach had separate categories for large cities and their surrounding areas, with a single category for rural counties. The new approach set up 27 geographical rating areas that included both urban and rural counties.
Analysis of Rating Change Impact
An analysis by Haeder's team from Texas A&M University School of Public Health found that both urban and rural consumers had more insurance carrier options after the rating change, but urban consumers still had more choices. Rural counties gained an average of three plans overall, while urban counties lost almost nine plans. Median premiums decreased for both rural and urban counties, with notably larger decreases for rural consumers.
Single State Insurer Ratings
A.M. Best, the world's oldest and most authoritative insurance rating source, affirmed Rural Mutual's rating as A+ (Superior), a rare feat for a single-state insurer. This rating is given to companies with an excellent ability to meet their ongoing obligations to policyholders. A.M. Best evaluates companies based on balance sheets, operating performance, business profile, profitability, and risk management. Rural Mutual's strong financial position and performance contributed to this upgrade.
Rural-Urban Differences in Insurance Coverage
There are substantial differences in insurance coverage between rural and urban areas, with higher rates of uninsurance in rural counties. This disparity is evident in pre-pregnancy, birth, and postpartum periods, impacting access to timely and adequate prenatal and postpartum care. Declining access to obstetric care in rural counties and high rates of severe maternal morbidity and mortality further highlight the challenges in rural areas. These factors contribute to the overall difficulty rural residents face in accessing quality healthcare services.
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Urban-rural insurance differences
There are several differences between urban and rural insurance, including insurance coverage, availability, and premiums. These differences are largely due to variations in supply and demand between urban and rural areas.
Insurance Coverage
In the United States, individuals in rural counties tend to experience higher rates of uninsurance compared to those in urban areas. This disparity is particularly evident during the perinatal period, encompassing pre-pregnancy, pregnancy, and the postpartum stage. The lack of insurance coverage in rural areas contributes to challenges in accessing high-quality perinatal care, resulting in higher rates of severe maternal morbidity and mortality among rural residents, including Indigenous people.
Insurance Availability
The availability of insurance plans also differs between urban and rural areas. Rural residents often face limited choices in health insurance coverage due to a shortage of providers. For instance, Texas previously utilized a rating system that categorized large cities and surrounding areas separately from rural counties. However, in 2023, Texas combined urban and rural counties into 27 geographical rating areas, aiming to increase competition and expand insurance coverage options.
Insurance Premiums
Insurance premiums can vary between urban and rural areas. Rural residents tend to face higher premiums due to factors such as age and health status. For example, rural residents are generally older and less healthy, leading to increased healthcare demand. By merging urban and rural rating areas, Texas was able to reduce premium differences, benefiting rural consumers who previously experienced higher premiums.
While there have been efforts to address urban-rural insurance disparities, further research and policy attention are necessary to ensure equitable access to quality healthcare for all, regardless of geographic location.
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Rural insurance premiums
In the United States, individuals in rural counties experience higher rates of uninsurance compared to urban residents. This is partly due to the fact that rural residents tend to be older and less healthy, increasing healthcare demand, while a shortage of providers and limited insurance coverage options affect supply.
Texas recently merged urban and rural ACA rating areas to increase competition and expand choice, with the goal of aligning premiums more closely with claims costs. This change improved health insurance choice and premiums for rural consumers, with premium decreases notably larger for rural consumers, helping to eliminate overall premium differences between rural and urban counties.
Prior to the change, Texas used an approach that set rating areas for large cities and their surrounding areas, with a separate category for rural counties. The new approach implemented in 2023 set up 27 geographical rating areas that included both urban and rural counties. Analysis found that rural counties gained an average of three plans overall after the switch, while median premiums decreased for both rural and urban counties.
While the changes have improved the situation for rural residents in Texas, some rural counties in the Hill Country and Panhandle regions did not see increased plan choices. Further, while the number of uninsured individuals has declined in both rural and urban counties from 2013 to 2017, the rates are still higher in rural areas.
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Rural health insurance coverage
Health insurance coverage is an important prerequisite for accessing quality healthcare services. However, for people living in rural areas, accessing quality healthcare services can be difficult. Rural residents tend to be older and less healthy, which increases healthcare demand. In addition, a shortage of providers and limited choices in health insurance coverage affect supply. As a result, individuals who reside in rural counties in the United States experience higher rates of uninsurance compared to urban residents.
In 2017, the county uninsured rates for people under 65 ranged from 2.3% in Norfolk County, Massachusetts, to 33.7% in Gaines County, Texas. The median county rate was 10.6%. While the number of uninsured individuals declined in both rural and urban counties from 2013 to 2017, the rates are still higher in rural areas. This disparity in insurance coverage between rural and urban areas has led to differences in healthcare outcomes, especially during critical periods such as pre-pregnancy, birth, and postpartum.
To address these disparities, some states have merged rural and urban rating areas for health insurance plans sold on the Affordable Care Act (ACA) Marketplace. Texas, for example, combined urban and rural counties into 27 geographical rating areas. This change aimed to increase competition, expand choice, and better align premiums and costs. As a result, both urban and rural consumers in Texas had more insurance carrier options, and rural counties gained an average of three plans overall. Additionally, premium decreases were more significant for rural consumers, helping to eliminate overall premium differences between rural and urban counties.
By adjusting ACA rating areas and reducing barriers to quality healthcare, rural residents can gain improved access to healthcare services. These changes in insurance rating systems represent a step towards addressing the inequities in healthcare access and receipt faced by rural residents. Further research and policy attention are needed to ensure that all individuals, regardless of their geographic location, have equitable access to quality healthcare and insurance coverage.
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Rural insurance providers
However, in 2023, Texas revamped the way it divides the state into rating areas, combining urban and rural counties into 27 geographical rating areas. This change aimed to increase competition and expand choice, and it was successful in improving health insurance choices and premiums for rural consumers. A study by Haeder's team at Texas A&M University School of Public Health found that rural counties gained an average of three plans overall after the switch, and median premiums decreased.
In the context of this improved landscape for rural insurance consumers, let's look at some rural insurance providers and how they are rated. One example is Rural Mutual Insurance, which serves Wisconsin residents and has received an A+ (Superior) Financial Strength Rating from A.M. Best, the world's oldest and most authoritative insurance rating source. This rating is an upgrade from the previous A (Excellent) rating and places Rural Mutual among the few single-state insurers in the US to achieve an A+ rating. A.M. Best's evaluation considers factors such as balance sheets, operating performance, business profile, profitability, and risk management.
Another provider is RCIS (Rural Community Insurance Services), which specializes in crop insurance for producers, helping them manage risk and providing outstanding customer service. While I couldn't find a specific rating for RCIS, their focus on risk management and customer service suggests a commitment to serving the insurance needs of rural communities.
Additionally, in Australia, there are several insurers providing rural and farm insurance, including WFI, Elders Insurance, and CGU. These insurers offer a range of coverage options, including crop insurance, farm vehicle insurance, farm personal accident and sickness coverage, and more. While I couldn't find specific ratings for these Australian providers, their range of products indicates a focus on serving the diverse needs of rural residents.
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Frequently asked questions
Rural Mutual Insurance has been rated A+ (Superior) by AM Best, which evaluates the financials of insurance companies.
AM Best is the world's oldest and most authoritative insurance rating source.
An A+ rating is an upgrade rarely awarded to single-state insurers, which typically face significant challenges, including frequent severe weather-related events and economic concerns.
The A+ rating is a result of the company's consistently strong balance sheet and operating performance, demonstrated by 63 consecutive quarters of policyholder surplus growth.
Insurance ratings can impact the availability and affordability of insurance plans for rural residents. For example, Texas recently merged urban and rural ACA rating areas, which improved health insurance choices and premiums for rural consumers.
