How do you know if your stop loss carrier has bells on their balls? And what’s the implication if they do or don’t? Glad you asked………..
We just learned of a stop loss carrier that guarantees, for a premium load of 6%, a 30% premium refund if spec. claims are below 50%.
Participating stop loss contracts are not new although few brokers and plan sponsors are aware they exist.
Brokers would be wise to negotiate refund arrangements with stop loss carriers before placing business, adding more competition to the process. Plan sponsors should demand it.
One of our best clients who has always been receptive to new ideas and “funky” suggestions recently emailed us a note during a renewal process which read in part:
Martha sent a report of our numbers for the 12 months through May. They look pretty good, and are almost exactly what we saw for the 12 months through July of 2022. The perennial question is what, if anything, do we want to change going forward?
He continued:
I have a couple of thoughts. First, Stop Loss. I know you’ve been a proponent of getting rid of it, but I just can’t quite bring myself to do that. We might look at a higher limit, and I’ll entertain (though may not adopt) any other funky thing you can come up with. Maybe some kind of participation where I get some money back if the experience at the end of the year is good. The SL carriers have been able to buy a lot of beer with the excess premiums I’ve paid them over the last few years. The problem, of course, is that I know there could be a catastrophe around the corner, and I will expect them to show up with bells on their balls when that happens.
Won’t hurt to ask, we thought, so we did, and we got.
What are the loss ratio statistics for spec. coverage? Whatever it is, it can be mitigated by placing an additional layer through ACA RE which will consistently produce profitable underwriting results. A funky suggestion? Nope, it’s real, it works, and funded by government printing presses.
Stop loss carrier reps. pictured above show up for renewal
Do you hear Christmas music in the background? Tinkling bells? Government printing presses humming through the night?
