What are normal executive salaries in health insurance companies?
The salaries of the executives at the well-known insurance companies are staggering and far exceed salaries of CEOs in other industries. In 2008, the annual salary for the CEO of one major insurance company was over $24 million.
Unless you are one of these high paid insurance executives, you are probably looking for affordable health insurance quotes. Enter your ZIP code now to obtain rates.
Of the top seven big companies, in 2008 no CEO earned less than $3 million. In fact, the LA Times reported last year that in 2009, the combined annual salaries of the nation’s top five for-profit insurance companies raked in a total of over $200 million.
Have health insurance executive salaries fallen?
At a time when most Americans and American companies are experiencing big hits to the pocketbook, health insurance company execs continue to rake in big bucks. All but one of the Big Five CEO’s mentioned above actually had wage increases in 2009. Insurance exec’s salaries are often calculated on company profits and company profits have been big.
In the same report, the LA Times stated that in 2009, net income for one of the top companies increased by 40% and another by 51%. This increase was followed by the companies hiking premium rates by as much as 29%.
More recently, the Insurance Journal reported that over 36% of the 350 insurance executives surveyed recently and the findings were that the companies they represented had been through a downturn in the past year. These executives also believe that there will be a further downturn in the upcoming year or so.
According to the New York Times, many feel that America is facing a double dip recession. A large percent believes there will not be any positive turnaround until at least 2013. Many executives indicate that the major changes facing the industry in the next few years will result from regulatory healthcare reform.
What does an insurance company executive do?
As with CEOs of any corporation, an insurance company executive’s main job is to increase bottom line profits for the company. Most CEOs report to a board of directors and company shareholders.
The work environment of an insurance executive is highly stressful and volatile. He must remain knowledgeable of regulations and guidelines in the insurance industry and from the government. He has to be innovative and look for new methods of operating while also cutting costs. Although these executives reap substantial benefits when profits are good, they may also find themselves out of a job if the bottom line isn’t sufficient.
As a whole, insurance execs believe that future growth opportunities will be in the areas of information technology, new products and services, and strategic (so called organic) acquisitions. These are examples of the types of strategies these CEOs must be sensitive to in their daily job.
How do insurance companies determine how much to pay their executives?
Executives at the big, publicly traded companies, pay their executives high salaries. A good chunk of their compensation however is tied to company profits and comes in the form of bonuses and stock options. The definition of profit for these companies is the amount of money left over from health insurance premiums after all expenses for customer healthcare costs have been paid.
According to a 2009 article by CNN Money, the insurance companies use a formula called a medical loss ratio to calculate profits. This formula has raised questions of late by lawmakers. The article goes on to say that in the early 1990s more than 90 cents of every premium dollar was spent on actual customer healthcare costs. This number has declined however to approximately 81 cents. This means that more money is going into the pockets of the company executives.
Do insurance company executive receive benefits other than pay?
The competition for one of these prime positions is stiff. In such an environment, companies find they have to sweeten the pot to get the best talent. As well, CEOs today look at additional perks with a sense of entitlement. The better the perks, the higher the CEO’s stature.
Above their exorbitant salaries, top health insurance company executives receive other tangible benefits. Examples are a company car, use of a company plane, and memberships to clubs or other organizations. Other perks include:
- Financial planning
- Free legal advice
- Expense accounts
- Personal fitness and training
Not everyone is fortunate enough to be an executive at an insurance company. If you are one of the not so fortunate, you probably want the most affordable health insurance rates possible. Enter your ZIP code now in the box provided!