Rising healthcare costs, inflationary pressures, and a surge in high-dollar claims are reshaping the medical stop-loss landscape. Employers are increasingly turning to self-funding to manage costs, while insurers face mounting challenges to profitability as claims outpace premiums. At the same time, the frequency of million-dollar claims — often tied to cancer treatments, premature births, and specialty therapies — continues to climb, putting pressure on traditional underwriting and portfolio strategies.
In response to these shifts, we partnered with Guy Carpenter to produce the third annual “Stop-Loss Market Update.” The report explores market growth, emerging risks, and how advanced analytics — including AI — are helping carriers rethink their approach to managing stop-loss portfolios.
Stop-loss premiums hit $39 billion as large claims surge
According to our report, the volume of stop-loss carrier premiums increased to $39 billion in 2024. This reflects a growth rate of 11.2% from 2019 to 2024. Of the annual growth, 10% was driven by cost trends and business mix changes, with the rest due to increased enrollment. However, claims increased at a faster rate, resulting in loss ratios deteriorating from 81.6% in 2019 to 86.0% in 2024.
With rising healthcare costs and inflation pressures, employers are looking for ways to control costs. Since 2019, enrollment in the fully insured medical market has dropped by almost 17%, with many employers migrating to self-funding mechanisms to lower costs.
There is also growing concern among insurance and reinsurance companies about the increase in large claims. The frequency of claims exceeding $1 million has risen steeply over the past five years and the expectation is that the frequency of these claims will continue to grow in the upcoming year. Most of these claims are related to cancer treatments, premature births, complex conditions, and specialty pharmacy.
How advanced analytics enhance stop-loss portfolios and manage large claims
Rising claim costs has placed a strain on some insurers' risk management and financial stability, posing significant profitability challenges for the medical stop-loss market. Along with Guy Carpenter, we offer AI and advanced analytical solutions to improve bottom line performance and effectively manage stop-loss blocks at both the portfolio and claimant levels.
The “Stop-Loss Market Update” report offers valuable insights into market trends, drivers of profitability, and how advanced analytical techniques can be used to address challenges in managing high-dollar claims.
