New predictive claim modeling tools could be making real changes in how employers, stop loss insurance providers and benefits advisors think about high-risk employer plan participants.
John Thornton, an executive vice president at Amalgamated Life, a company that’s been offering medical stop-loss insurance since 2008, said in an email that he thinks the tools are adding to stop-loss insurers’ use of “lasering,” or excluding coverage for claims associated with certain participants.
“With the frequency of claims in excess of $1 million rising significantly, carriers are using lasers more frequently to mitigate risks,” Thornton says.
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One reason is pressure to hold down stop-loss claim costs, but another is because of improvements in data technology, Thornton says.
Technology is making health plan risk data easier to collect and share, and “stop-loss carriers are requesting more detailed claims information, to more accurately predict the cost of claims,” Thornton says.
Employers are responding by making more requests for quotes for stop-loss insurance with “no new laser,” he says.
Stop-loss insurers use data to find those who need more than $1 million in care
The same charts and tables that are helping employers and advisors identify opportunities to improve participant wellness are helping stop-loss issuers identify participants who could end up needing more than $1 million worth of care.
Stop-loss insurance: Employers with self-funded health plans use stop-loss insurance to protect their plans against the risk of catastrophic losses.
Executives in the stop-loss market have been talking about a surge in claims and a need for pricing and underwriting discipline for almost two years. Some have started to report seeing the rate of increase in claims stabilizing at a high but predictable level in recent months.
But Highmark, for example, recently reported that its stop-loss unit lost $107 million on $1.3 billion in stop-loss revenue in 2025.
Thornton’s perspective: Thornton says he believes that more issuers are leaving the stop-loss market now than entering it.
Some carriers will always be too aggressive about trying to grow market share, and those carriers may later have to take corrective actions to weed out losing blocks of business, he says.
But “the stop-loss market has been and will continue to be dynamic,” Thornton says. “Carriers who maintain a slow, steady growth plan, with disciplined underwriting guidelines, will continue to experience growth.”
Overall, the market interests of the remaining stop-loss players seem similar to what they were in the past, Thornton said.
Most employers that have tried offering self-insured plans and stop-loss insurance stick with that combination, because they like the extra information and flexibility they get by self-insuring, he adds.
“Fully insured carriers don’t provide very good details on claims data, and they force a plan sponsor to buy their pre-packaged plans,” Thornton says.
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