Best Market Segment Report: More Self-Insured Plans Drive Stop-Loss Segment Growth

OLDWICK, NJ–(BUSINESS WIRE)–As more U.S. employers turn to self-funded health plans to contain employee benefit costs, the stop-loss insurance segment has seen double-digit growth over the past each of the past four years, hitting $25.2 billion in 2020, according to a AM Best report.

the Best Market Segment Report notes that self-funded insurance has become more attractive since the implementation of the Affordable Care Act, which led to a major shift in the commercial health employer group insurance market – the largest market for health insurers. Other key takeaways from the report, titled “More Self-Insured Plans Drive Stop-Loss Segment Growth,” include the following:

  • The decline in the medical loss ratio (MLR) of 100 basis points to 81.7% in 2020 was less pronounced than the drop in the fully insured market.

  • More and more small groups have purchased stop-loss insurance through level-funded products.

  • The top 10 stop-loss writers generate nearly three quarters of the premium.

  • The amount of claims covered by stop-loss carriers has also increased with the growing number of expensive medical treatments.

“Stop-loss writers have more pricing flexibility than the direct trade segment; however, stop-loss claims have increased over the past 10 years,” said Doniella Pliss, Director, AM Best. “In some cases, rate increases have been in the lower double digits to match the claims trend, but overall stop loss rates have generally increased faster compared to commercial group health products. .”

Advances in technology play a significant role in the stop-loss insurance segment, as employer groups seek more administrative customization and flexibility, while providers prefer greater connectivity and faster claims settlement. Additionally, employer groups want stop-loss carriers to actively manage high-cost claims and be able to optimize and direct medical treatments.

“Larger stop-loss insurers with more robust technology investments have an advantage, but as the size of the stop-loss client pool has shrunk over the past decade, some smaller stop-loss insurers have managed to retain clients through to more personalized service,” said Wayne Kaminski, Principal Financial Analyst, AM Best.

Interest in self-funding continues to grow, even throughout the pandemic. AM Best believes that the ability of stop-loss insurers to effectively manage high-value medical claims and offer more personalized financial solutions to employer groups will drive competition in the stop-loss market in the short to medium term.

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AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

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