Tips on Stop Loss Insurance Proposal Requests

When seeking proposals from multiple brokers/TPAs at the same time the market advantage is always to the incumbent broker/TPA……………..

Below is the information stop loss carriers need in order to evaluate risk and offer a proposal.

Note the request for information on the top ten Rx claimants. In the past this was not required or needed but now that drug spend is typically the second largest plan spend (after hospital claims) underwriters must factor in a plan’s Rx spend and eligible drug list.

Does your plan cover all specialty drugs through an open formulary? Does your plan exclude specialty drugs? Does your plan cover Duexis? The last question is an almost sure fire way to determine if a plan is paying attention to their drug spend.

Removing specialty drugs is worth 18-22% off aggregate factors.

The amount of data and work that can go into shopping for stop loss insurance is not a small task.

When seeking proposals from multiple brokers/TPAs at the same time the market advantage is always to the incumbent broker/TPA. They control the data. They can lock up the market before their competitors can which gives them a de facto monopoly.

When the incumbent broker releases the data knowing their competitors will be given a chance to compete against them, many will resort to “doctoring” the data and/or refuse to release certain data citing PHI concerns. Please know a plan sponsor has a fiduciary duty to properly manage plan assets and legal right to share PHI for underwriting purposes. Don’t let anyone tell you otherwise.

A good example of doctoring claim data occurred some years ago when we were acting as commissioned insurance brokers back in the day. We were bidding on the City of Mission in deep south Texas. This was a +1,000 life case and was self-funded at the time. The Broker of Record was a former San Antonio politician who, upon leaving office, started an insurance brokerage agency staffed with former BCBSTX employees and other “seasoned” industry insiders.

We bid stop loss and delivered our proposal with all the normal conditions and contingencies. The city called us after the bid opening and said “You are in the top two proposals, but you have to remove the $250,000 laser to be competitive.”

I called the underwriter. “Sam, we may get this case! But we need to reconsider the laser. Can you remove it or at least temper it a bit?”

“No Bill, the laser stays unless you can get more information.”

I asked the city for more information and was told there wasn’t any. So I called the underwriter. “Sam, no bueno. Can’t get the data.” I said.

“Bill, I just found out we are competing against ourselves here. Little did you and I know, the current broker sent us a request too but another underwriter worked on it. I just now found out, and have compared the data submitted by you and the other broker. The other broker failed to mention or provide information on the large claimant. So our quote through him is the same as yours, with a $250,000 laser!”

When I told the city about this new development, their response was “Well, were going with the other broker and if there is a laser we will seek recourse through his E&O policy.” The city was actually mad at me for “rocking the boat.”

Stop loss commissions typically include 10% to the broker and 5% to the TPA. Commission bonuses are fairly common which can drive total commissions to +20%.

Some plan sponsors refuse to pay commissions. TPAs and brokers will often make up the loss by loading a line item somewhere else or charge a “stop loss integration” fee to their monthly invoice. (Traditional TPAs typically earn commissions on everything they touch by uploading fees on each plan vendor – PBM, PPO discounts, UR, stop loss, etc.).

Below is required information to solicit stop loss proposals. The process from beginning to end can be as short as a week or as long as a month or more. Shopping too early works against getting a best and firm offer. Shopping within 60-90 days of the renewal date is best timing. Stop loss proposals always contain contingencies and conditions so be careful in your evaluation. Be sure to pick the right contract type. Consider and vet the source; MGU, Wholesaler, Direct writer.


  • Current/Renewal rates and fees
  • Current stop loss contract
  • Current Census, including DOB, Gender, Home Zip Code, Contract, Current Plan enrollment
  • Aggregate Report (medical and Rx claims SL reimbursements, fixed costs, etc.)
  • 50% report (thru current date)
  • Pre-Cert reports (thru current date)
  • Large claim report with LCM Notes for the current and previous contract year
  • Top 10 Rx claimants by dollar amounts paid (thru current date)
  • Pending claims report (thru current date)
  • Denied claims report (thru current date)
  • Requested plan design