According to a recent research report from AM Best, employers have been using stop-loss insurance, which coincides with an increase of insurance revenues over the course of the last few years, as reported on by Business Wire. Since the passing of the Affordable Care Act (ACA), many U.S. employers have been looking for options for their workplace healthcare. One of these options has been self-insurance, which comes with inevitable risks. In order to help mitigate these risks, many employers are consistently adopting stop-loss policies. This increase in stop-loss has helped stabilize specific health insurance products.
How Stop-Loss Works
When an employer adopts a stop-loss insurance policy, it adds a layer of protection that otherwise wouldn’t be there with regular self-insurance. When an individual claim or an aggregate amount of claims exceeds a certain threshold, the stop loss-insurer is then financially responsible for that claim. The two main types of stop-loss insurance is individual and aggregate. Individual stop-loss covers one individual employee while aggregate covers multiple employees, usually all employees that have opted into the employer’s health plan. Typically, self-insured employers tend to use a combination of both individual and aggregate stop-loss that best fits them.
Increase in Stop-Loss Revenues
According to the research report from AM Best, net premium revenues from stop-loss businesses more than doubled from 2011 until 2017. This increased growth is largely due to the fact there has been more competition for insurance products because employers continue to seek to lower out-of-pocket expenses and have been exploring options.
Not all stop-loss insurance is used specifically by self-insured employers. For instance, Blue Cross and Blue Shield is a large traditional insurer that has used stop-loss insurance in order to reduce the risks that have come along with uncertainties due to ACA regulations. Blue Cross and Blue Shield was actually responsible for the largest percentage of stop-loss products purchased by traditional insurers up until 2017. Blue Cross was responsible for purchasing $3.9 billion in stop loss in 2016, adding up to 27 percent.
The Future of Stop-Loss Insurance
Self-insurers and traditional insurers alike can mitigate risk from catastrophic claims while helping to increase revenue while offering more options to customers that aren’t otherwise available. As we continue to see advancements in the stop-loss industry, this niche market should only continue to grow and offer more options and savings for employers who decide to adopt a stop-loss policy. We are excited to see the reports for this and last year that will come out in 2020.
If you are interested in learning more about whether purchasing a stop loss-insurance policy can help you save money on your workplace health insurance while offering more and better plan options for your employees, feel free to give us a call anytime. Prodigy stop-loss underwriters are dedicated to answering all your questions and offering you the best possible stop-loss insurance that can save you money on your cash flow while offering an increase of plan options for all of your employees that participate in your health plan.