4 Accident & Health Insurers to Watch Amid Elevated Healthcare Costs

About the Industry

The Zacks Accident and Health (A&H) insurance industry comprises companies providing workers’ compensation insurance, mainly to employers operating in hazardous industries. Insurers provide group, individual and voluntary supplemental products, including employer-funded workers’ compensation that protects employees without reducing their pay. Claims are covered by insurers or state funds. Such coverage supports employee morale and productivity while reducing employers’ claim costs. Growing awareness of these benefits strengthens the industry’s outlook. Per Business Research Insight, the A&H Insurance market, worth about $300 billion in 2024, is projected to expand to about $420 billion by 2033—reflecting a CAGR of about 3.8%.

4 Trends Shaping the Future of the Accident & Health Insurance Industry

Pricing Pressure to Continue: Workers’ compensation pricing is likely to remain under pressure due to inflation, rising medical expenses and an aging population. Although inflation is projected at 2.4% by the Fed, the Centers for Medicare and Medicaid predicts healthcare spending to grow 5.4% annually through 2028, increasing demand for supplemental health coverage. Per a report in Commercial Risks, AM Best expects favorable loss development and lower claim frequency, alongside insurers’ efforts to retain market share, to constrain rate increases and potentially limit premium growth. Nevertheless, recovering commercial and industrial activity should support demand. SpendEdge projects workers’ compensation pricing to increase at a 5.3% CAGR between 2022 and 2026, while CBIZ forecasts a more modest 2% rise.

Persistent medical inflation: Medical inflation remains a major challenge for Accident & Health insurers. Aon projects global medical costs to rise by approximately 9.8% in 2026, outpacing general inflation in many markets. Higher hospital wages, diagnostic expenses, provider fees, healthcare utilization, and costly medicines are driving this increase. The resulting pressure extends beyond claims costs, forcing insurers to balance profitability with adequate benefits and affordable premiums—without weakening coverage or limiting customers’ access to essential healthcare.

Improvement in Claims Frequency: Improved workplace conditions and stronger safety measures have reduced claim frequency, supporting Accident & Health insurers’ performance. Growth has also been driven by employers offering broader benefits. Effective workers’ compensation policies provide better care for injured employees while improving productivity, morale and retention and reducing claims costs and financial stress. Expanding underwriting exposure, conservative reserves and safer workplaces continue to benefit the industry. However, an aging workforce presents a developing risk. The Bureau of Labor Statistics expects the number of workers aged 75 and older to increase by 96.5% over the next decade, potentially raising both claim frequency and severity.

Increasing Adoption of Technology: The industry is witnessing accelerated adoption of technology in operations, including the use of artificial intelligence. AI, data analytics, automation, cloud computing and blockchain should help insurers gain a competitive edge. Telemedicine is also gaining traction, in turn, saving costs. Machine learning and predictive analytics enable real-time risk profiling. Policies are increasingly bundling telehealth services. Per a CBIZ report, industry data reveals that artificial intelligence could reduce workers’ compensation claim expense by about 45%. Nonetheless, higher spending on technological advancements will result in escalated expense ratios.

Zacks Industry Rank Indicates Bleak Prospects

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates dull near-term prospects. The Zacks Accident and Health Insurance industry, housed within the broader Zacks Finance sector, currently carries a Zacks Industry Rank #214 which places it in the bottom 13% of the 246 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

The industry’s position in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually losing confidence in this group’s earnings growth potential.  Current year estimates have declined 3.2% in a year.

Before we present a few stocks one can have in their portfolio, given their business advancement endeavors, it’s worth taking a look at the industry’s performance and current valuation.

Industry Versus Sector and S&P 500

The Accident and Health Insurance industry has outperformed its sector but underperformed the Zacks S&P 500 composite in the past six months. The stocks in this industry have collectively gained 12.6% in the past six months versus the Finance sector’s increase of 8.5%. The Zacks S&P 500 composite has risen 13.5% over the same period.

6-Months Price Performance 

Current Valuation

On the basis of a trailing 12-month price-to-book (P/B), commonly used for valuing insurance stocks, the industry is currently trading at 1.81X compared with the Zacks S&P 500 composite’s 7.38X and the sector’s 4.51X.

Over the past five years, the industry has traded as high as 2.14X, as low as 0.97X and at the median of 1.76X.

Price-to-Book (P/B) Ratio (TTM)

Price-to-Book (P/B) Ratio (TTM)

4 Accident & Health Insurance Stocks in Focus

We are presenting four Zacks Rank #3 (Hold) stocks from the Zacks Accident and Health Insurance industry. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Aflac: This Columbus, GA-based company offers voluntary supplemental health and life insurance products and operates through Aflac Japan and Aflac U.S. The top line benefits from strategic growth investments, robust persistency rates and enhanced productivity. Aflac introduces products and upgrades existing ones to address the changing needs of its customers, as well as integrates digital solutions into its offerings to align with the ongoing trend of digitization. This, in turn, should support its profit margins. The Argus buyout will provide it with a platform to build the company’s network of dental and vision products and further strengthen its U.S. segment. 

AFL delivered a trailing four-quarter earnings surprise of 6.56% on average. The Zacks Consensus Estimate for 2026 implies a year-over-year decrease of 5.9% and has moved south in the past 30 days. The consensus estimate for 2027 earnings implies an 8.7% year-over-year increase but has moved south in the past 30 days.  The expected long-term earnings growth rate is pegged at 9.2%.

Price and Consensus: AFL

Globe Life: Based in McKinney, TX, Globe Life is an insurance holding company providing individual life and supplemental health insurance to lower-middle to middle-income households throughout the United States. This insurer has been witnessing a positive trend in revenues, driven by premium growth in its Life Insurance and Health Insurance segments and net investment income.  
The strong performance of the American Income and Liberty National divisions should drive the top line in the future. Liberty National is likely to continue to benefit from improved productivity and agent count. GL’s expansion initiatives to capture heavily populated and less penetrated areas should drive growth in the future. Net life sales, as well as net health sales, are expected to grow in the mid-teens for Liberty National.

The Zacks Consensus Estimate for 2026 and 2027 earnings indicates an 8.1% and 5.2% year-over-year increase, respectively. The consensus estimate for 2026 earnings has moved up 0.4%, but the same for 2027 has moved down 0.7% in the past 30 days.

Price and Consensus: GL

Trupanion: Headquartered in Seattle, WA, Trupanion is a provider of insurance for cats and dogs in the United States, Canada, Continental Europe and Australia. It operates in a total addressable market worth $34.1 billion, which is a large but underpenetrated market. This pet insurer is well-poised to grow, courtesy of its heightened focus on pets’ health and well-being in an underpenetrated pet insurance market, product launches, extended operating boundaries and a solid capital position. This pet insurer continues to invest in areas where it believes it can achieve high internal rates of return. Improving pricing should add to its upside.

The Zacks Consensus Estimate for 2026 and 2027 suggests a 28.9% and an 18.1% increase, respectively, on a year-over-year basis. TRUP delivered a trailing four-quarter earnings surprise of 53.03%, on average. It has a Growth Score of A. The consensus estimate for 2026 earnings has moved 4 cents north but the same for 2027 has moved 3 cents south in the past 30 days. The expected long-term earnings growth rate is pegged at 23.6%.

Price and Consensus: TRUP

Employers Holdings: Based in Henderson, NV, Employers Holdings is the 19th largest provider of workers' compensation insurance to small businesses in the low-to-medium hazard industries. EIG should continue to benefit from a solid presence in attractive markets and prudent underwriting. Its multiple distribution channels provide competitive advantages. 

The consensus estimate for 2026 and 2027 earnings suggests a 139.8% and 5.2% increase, respectively, on a year-over-year basis. The consensus estimate for 2026 earnings has moved nearly 2.3% north in the past 30 days. 

Price and Consensus: EIG





 

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This article originally published on Zacks Investment Research (zacks.com).

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