The stop-loss insurance market is facing a stress test. After several years of relatively stable trends, a wave of high-dollar claims has triggered significant losses, rate hikes and tighter underwriting.

For employers with self-insured health plans, this shift brings serious consequences. They face higher stop-loss premiums, increased claim scrutiny, fewer coverage guarantees and in some cases, growing pressure to move away from self-funding altogether.

aequum views this moment not as a crisis but as an opportunity to take action and reinforce the partnerships that are most essential.

A Volatile Stop-Loss Market in Flux

Sun Life, one of the largest stop-loss carriers in the U.S., recently reported a sharp increase in large and complex claims. In Q4 of 2024 alone, they raised renewal rates by an average of 14% and severed ties with underperforming plan blocks. Claims severity, not frequency, is the main driver, with advanced cancers, neonatal care and rising hospital charges leading the list.

Other carriers, like Voya and Cigna, reported even steeper loss ratios. In some cases, stop-loss claims outpaced premium income by more than 15%, prompting mid-year pricing action and stricter terms.

Tokyo Marine reported historical data that confirmed a sharp increase in frequency following Health Reform’s elimination of annual and lifetime benefit maximums. They highlighted recent developments including the number of gene therapies with an average cost of $2.5 million – once 2, now 14, expected to grow to 30 by 2027!

From Stabilization to Spike: What Changed?

Just months earlier, Sun Life executives signaled cautious optimism, pointing to market stabilization as aggressive pricing cycles wound down. They acknowledged that some competitors had underpriced risk in a bid for market share, a move that’s now being corrected. The result? A sharp pivot as loss trends normalize or even overshoot and underwriters recalibrate their outlook for 2025 and beyond.

How Employers Get Caught in the Middle

For self-insured employers, stop-loss coverage serves as the financial backstop that makes sponsoring a health plan possible. When claims increase and underwriting becomes more restrictive, the impact falls directly on employers and their employees. They may be forced to accept higher fixed costs, reduce benefits or give up plan control if transitioning (back) to a fully insured model becomes the only option.

This is where aequum plays a crucial role.

aequum’s Value to Stop-Loss Carriers and Employers Alike

aequum bridges the gap between employer-sponsored plans and their stop-loss partners. aequum helps make claims more manageable, defensible and predictable, qualities every underwriter values. aequum’s work directly supports loss ratio improvement by:

• Challenging Excessive Charges: aequum identifies and disputes inflated medical bills that drive catastrophic claim values. This reduces net paid claims and enhances cost containment at the most critical point of exposure.
• Resolving Complex Disputes: aequum’s legal team defends against unfair balance billing, overcharges and coverage disputes that often trigger stop-loss reimbursements.
• Improving Data and Transparency: aequum equips employers with insights into claim drivers, pricing outliers and provider behavior, giving both the plan and the stop-loss carrier better visibility into risk.
• Demonstrating Claims Stewardship: aequum’s involvement signals to stop-loss partners that the employer is actively managing plan risk, not just passively transferring it.

Relationships Over Rate Sheets

As the stop-loss market recalibrates, strong relationships matter more than ever. Carriers are looking beyond spreadsheets to assess the long-term viability of the plans they insure. They want to partner with employers and partners like aequum, who show they take claim management seriously.

In a tightening market, that difference can mean more favorable renewals, stronger terms and a higher likelihood of continued coverage.

The Bottom Line

The next renewal cycle will be a proving ground. Plans that can demonstrate effective cost management will stand out. Those that can’t may face higher premiums or reduced access to stop-loss protection.

For plans that have a calendar year plan year, the time for action in preparation for 2026 renewals is now, today!

aequum helps make your plan a smarter risk, for both your business and your stop-loss partner.

Contact us today to learn how aequum’s approach helps strengthen your relationship with stop-loss carriers while protecting your health plan from excessive costs.