Content area
Full Text
Despite an increase in premium income to more than $1 billion, Blue Cross and Blue Shield of Indiana Inc. reported an underwriting loss of $66.9 million in 1987, down sharply from last year's loss of $11.3 million.
The company's 1987 annual report also disclosed a $25 million net loss for the year, reversing a $66 million profit tallied in 1986.
Officials at Blue Cross and Blue Shield, noting that the insurance industry was hit hard nationwide, attribute the losses to high claims ratios and to pricing that didn't cover costs. Blue Cross and Blue Shield plans across the country, which number about 75, lost a collective $1.8 billion.
"It was a difficult year," said Patrick M. Sheridan, executive vice president and chief financial officer of Blue Cross.
Sheridan also attributed the losses to the cyclical nature of the insurance industry, where three years of underwriting gains are followed by three years of underwriting losses.
He said 1987 was the second year of the loss cycle.
"We expected to have a down year," Sheridan said. "And 1988 is also expected to be a difficult year for the industry."
Blue Cross was able to survive '87 losses, however,...