Stop-loss insurance claims increased a lot more than expected in 2025, according to Tokio Marine HCC.
The underlying trend for specific claims, or claims for individual patients with very high medical bills, was 9.5 percentage points higher than the average for the period from 2019 through 2023, the company said in a new 2025 stop-loss experience analysis.
The 2025 increase compares with a 5-percentage increase in 2024.
“We were undeniably surprised by these trends,” analysts said in the report.
“The market has begun to react to this ongoing change in cost trend, but will need to continue tightening to reach adequate levels across the stop-loss market,” analysts said.
Tokio Marine HCC analysts did not give the actual rate of stop-loss claim cost increases that occurred from 2019 through 2023, and company representatives were not immediately available to comment on the cost trend figures.
See also: Voya raised employer stop-loss rates an average of 24%
What it means: Quotes for 2027 stop-loss renewals could be comparable to the quotes for 2026 stop-loss renewals.
Stop-loss insurance: About two-thirds of U.S. employers that offer health coverage now have self-insured health plans. Employers with self-insured health plans use stop-loss insurance to protect the plans from catastrophic claim costs.
The surge: The COVID-19 pandemic reduced use of care from 2020 through 2023, but insurers and stop-loss providers began talking about seeing a big increase in claims in mid-2024.
Executives from Cigna and Sun Life Financial said recently that they thought stop-loss costs are still increasing rapidly, but at a rate in line with what they have seen since the surge started.
Tokio Marine HCC observations: Analysts at Tokio Marine HCC said the factors responsible for the 2025 surge appear to include an “increase in frequency of claims at all levels, including catastrophic claim thresholds.”
The conditions leading to higher claims included cancer, conditions affecting fetuses and newborn babies, and conditions requiring transplants.
Trade tariffs, cuts in Medicare Advantage plan reimbursement rates, the aging of the U.S. population, increased use of GLP-1 agonist weight-loss drugs, and a shrinking supply of medical professionals may have also contributed to rising costs at employer plans, analysts said.
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