Professor Hoyt analyzed the economics of the mutual health insurance industry.
Counsel for the defense, a mutual health insurance company, retained Cornerstone Research to support Robert Hoyt of the University of Georgia in this matter. The policyholders (who act as shareholders) sued the company’s management for allegedly accruing an excessive surplus instead of paying that revenue back to policyholders.
Professor Hoyt performed several analyses and provided expert testimony in deposition. He reviewed the decision-making process of the company’s management and board, the factors they considered in making decisions related to the surplus, and the ways they expected to add value to policyholders through the surplus.
He also provided an overview of the economics of the mutual health insurance industry, including:
- The influence of the ownership structure on the way companies make decisions.
- The reasons insurance companies hold surpluses, including as a reserve for potential payouts to policyholders and for strategic projects that can add value to policyholders.
- The impact of recent changes in the health insurance industry, including the Affordable Care Act.
- The financial metrics used by insurance companies and regulators to evaluate the appropriate size of insurance surpluses, such as Risk-Based Capital.
- Prior regulatory investigations into insurance companies’ surplus levels and related enforcement actions.