Principal Financial Quits Writing Health Care Policies

“Principal said its exit in part is because smaller insurers will have a hard time competing with bigger players under the overhaul. Expenses such as for sales forces are a bigger proportion of costs for smaller insurers, said Mr. Houston, making it harder to meet the new threshold on how much they pay out for care, known as the medical-loss ratio. ‘In the past, scale hasn’t mattered,’ said Mr. Houston. ‘But with administrative costs getting the focus,’ the company would have to grow significantly to stay in the business.”