By Daron Potts
Welcome to the self-funding jungle! Your client is at 60% of manual. They’ve run perfectly for three years. And their renewal is still going up. This is the pricing floor at work.
Most stop-loss carriers maintain a minimum percent-to-manual—a floor below which they won’t quote regardless of experience. This guardrail typically sits between 50% and 70% of manual rates.
If a carrier’s manual rate is $100 PEPM and their floor is 60%, the lowest possible quote is $60 PEPM. It doesn’t matter if the group’s experience suggests $45 PEPM. The carrier won’t go there.
Here’s where it gets frustrating: manual rates increase every year to account for medical trend and leveraged trend. When the carrier updates their manual from $100 to $108 PEPM, that 60% floor moves from $60 to $64.80.
The group did nothing wrong. Their claims were excellent. But they’re anchored to a rising baseline.
This dynamic is one of the most misunderstood aspects of stop-loss renewals. Groups at the floor often feel punished despite strong performance. In reality, they’re getting the best rate the carrier can offer—it’s just that “best rate” is tied to an index that keeps climbing.
For brokers, this means setting realistic expectations early. If a group is already at or near the floor, the renewal conversation isn’t about claims performance. It’s about where manual rates are headed.
