We collaborated with Guy Carpenter on the inaugural Stop-loss Market Update report, which highlights the significant growth seen in the stop-loss market, profitability challenges seen with recent market trends, the growing impact of high-dollar claims and therapies, and emerging opportunities to look at the stop-loss market in new ways via artificial intelligence (AI) and advanced analytics.
2017-2022 statutory financials results
Stop-loss carrier premium volume increased to $31.6 billion in 2022, reflecting a growth rate of 13.4% from 2017-2022, with 10% of the annual growth attributable to cost trends and business mix changes, and the remainder due to increased enrollment. However, claims increased at a faster rate, resulting in loss ratios deteriorating from 78.5% in 2017 to 84.1% in 2022.
Stop-loss market trends
With the increase in healthcare costs and continued pressures from inflation, employers are actively seeking alternatives to control costs. Enrollment in the fully insured medical market has declined by 14.2% since 2017 as employers are migrating to self-funding mechanisms as alternatives to lower costs. The increase in claims over $1 million in the past five years is a growing concern for insurance and reinsurance companies.
High dollar claims trends
Overall medical trends have been reasonably stable in about the 4% range over the past five years, though leveraged trends for higher attachment points have been as high as 20+%. These are driven by complex inpatient claims, including neonates, as well as increased costs for injectables and dialysis, along with emerging costs for cell and genetic therapies.
Healthcare and large claims applications of advanced analytics
Finally, we also highlight the applications of advanced analytics and AI in addressing large claims. Emerging techniques, including using previously underutilized data to predict large claims, are promising tools to address challenges in managing the increasing exposure stop loss insurers have to high dollar claims.
Overall, the Stop-Loss Market Update provides valuable insights into the stop-loss market, including trends and drivers that impact stop-loss insurer financial results and profitability, as well as advanced analytical techniques that can be used to address challenges in managing high dollar claims.