Every year, Captive Review releases their Power 50 list, which spotlights top professionals in the world of captive insurance. This year our SVP, Prabal Lakhanpal was featured on the list at #31. Check out the full article here.

Medical stop-loss coverage protects organizations that self-insure their health plans from catastrophic medical and prescription drug claims. It has long been a valuable tool for small- and medium-sized employers seeking to limit their financial exposure to unexpected, high-cost claims. However, as healthcare and insurance dynamics shift, even large employers are increasingly turning to stop-loss coverage, particularly through captive insurance models.

1. Hardening Markets and Rising Premiums

Insurance markets have been hardening, with factors such as the lingering effects of the COVID-19 pandemic, economic uncertainty, and climate-related disasters (e.g., California wildfires, Hurricane Milton, etc) driving up premiums. Providers face higher operational costs due to regulatory changes and rising healthcare utilization, pushing insurers to reassess risks and raise prices. For self-insured employers, these market shifts result in increased reinsurance costs and reduced flexibility.

Captive medical stop-loss programs offer protection from these rising premiums by allowing employers to control claims funding and reserves. Captives offer a more customized solution compared to traditional insurers, enabling companies to mitigate costs while maintaining financial stability.

2. Volatile Claims and High Costs

Healthcare claims have become more unpredictable, especially with the rise of costly specialty treatments such as gene therapies and cancer drugs. This unpredictability can make it difficult for employers to forecast healthcare costs. A well-structured medical stop-loss program smooths out this volatility, helping employers manage cash flow by transferring risk to a captive. This approach allows for more predictable healthcare spending, similar to a fixed-premium model, despite the fluctuating nature of claims.

3. Rising Healthcare Costs

Healthcare costs continue to rise sharply, projected to increase by 8% annually due to higher care utilization and rising specialty medication costs. Traditional cost-shifting methods like high-deductible plans are no longer sufficient. Medical stop-loss coverage through captives offers a long-term solution by allowing employers to establish formal reserves and fund future high-cost years. This enables them to take a proactive approach to managing healthcare costs while improving benefits offerings.

4. Enhanced Control and Transparency

Captive stop-loss programs give employers more control over plan design and claims management. With greater access to data, employers can make informed decisions about cost drivers and health management initiatives. They can also secure better rebates on pharmacy benefits, reducing overall spending. Employers using captives as a purchasing platform to carve out pharmacy benefits, see overall Rx spend decrease, often saving 15-30% on net pharmacy claims. Captives provide the flexibility to tailor coverage to an employer’s unique needs, aligning with broader financial and risk management strategies.

A Multi-Layered Protection Strategy

In a volatile healthcare environment, captive medical stop-loss coverage offers employers a customizable, multi-layered approach to risk management. It enables organizations to not only manage current challenges but also shape a sustainable future for their healthcare benefits.

We’re excited to announce that our Analyst, Spencer Towle, was featured in Captive International’s FORTY Under 40 Awards this year! The award spotlights the most influential figures in captive insurance under the age of 40. You can find his winner Q&A responses here.

We’re excited to announce that our Consultant, Aviel Shalev, was featured in Captive International’s FORTY Under 40 Awards this year! The award spotlights the most influential figures in captive insurance under the age of 40. You can find his winner Q&A responses here.

We’re excited to announce that our Senior Consulting Actuary, Nick Frongillo, was featured in Captive International’s FORTY Under 40 Awards this year! The award spotlights the most influential figures in captive insurance under the age of 40. You can find his winner Q&A responses here.

We’re excited to announce that our SVP, Prabal Lakhanpal, was featured in Captive International’s FORTY Under 40 Awards this year! The award spotlights the most influential figures in captive insurance under the age of 40. You can find his winner Q&A responses here.

In a recent Financier Worldwide Podcast episode, our SVP, Prabal Lakhanpal speaks about what captive insurance entails; the drivers behind its growing popularity; how businesses can apply it to fund their risks and bridge gaps in coverage; how it can lead to greater capital efficiency and better structuring of risk; and what the next evolution of captives might be. You can find the full episode here.

Captive International recently released its Forty Under 40 Awards, which spotlights the top industry leaders under 40 years old impacting captive insurance. We are excited to announce that four of our colleagues were on this list this year! You can find the full list here.

Prabal Lakhanpal (Senior Vice President)
Nick Fongillo (Senior Consulting Actuary)
Aviel Shalev (Consultant)
Spencer Towle (Analyst)

In a recent article on Captive.com, spotlighting the CICA session, “Employee Benefits and Medical Stop-Loss: A Partnership between HR, Finance, Risk, and Markets,” our SVP, Prabal Lakhanpal explains the legal process of setting up a captive and results employers can expect. You can find the full article here.