Projected Increase in Stop-Loss Insurance Claims for 2025 and Beyond

Tokio Marine HCC has projected that the stop-loss insurance market will continue to see restricted terms in 2027. The company's recent analysis indicates a more significant increase in stop-loss insurance claims than anticipated in 2025. Specifically, claims for individual patients with exceptionally high medical expenses jumped 9.5 percentage points above the average observed from 2019 to 2023, an increase from the 5-point rise noted in 2024.

Analysts at Tokio Marine HCC were taken aback by these trends, emphasizing that the market requires further tightening to address the evolving cost landscape. While the actual rate of increase in stop-loss claim costs from 2019 through 2023 remains undisclosed, the report suggests that 2027 renewal quotes may mirror those for 2026.

Importance of Stop-Loss Insurance

Stop-loss insurance remains vital for around two-thirds of U.S. employers offering self-insured health plans, acting as a safeguard against excessive claim costs. The COVID-19 pandemic initially reduced healthcare utilization from 2020 through 2023, but by mid-2024, insurers reported a noticeable hike in claims.

Executives from Cigna and Sun Life Financial have noted a persistent upward trend in stop-loss costs, consistent with the post-pandemic surge. Tokio Marine HCC's report attributes the rise in 2025 claims to an increase in claim frequency across all levels, notably for catastrophic claims caused by cancer, neonatal issues, and transplants.

Additional influences on employer plan costs may include demographic shifts such as an aging population, changes in healthcare reimbursement, and the growing use of specific medications. These factors collectively highlight the challenges faced in maintaining stable stop-loss insurance rates.