Guy Carpenter’s Carol Adams Joins with Oliver Wyman on Healthcare Stop Loss Report

Investment Rating - The report does not explicitly state an investment rating for the stop loss market, but it provides insights into growth trends and market dynamics that could inform investment decisions. Core Insights - The stop loss carrier premium volume increased to $35.5 billion in 2023, reflecting an 11.9% growth rate from 2018 to 2023, with 10.4% of this growth attributed to cost trends and business mix changes, while the remainder was due to increased enrollment [4][22]. - Claims have increased at a faster rate than premiums, resulting in a deterioration of loss ratios from 79.5% in 2018 to 80.3% in 2023 [4][22]. - The trend towards self-funding among employers is growing, with 65% of covered employees in self-funded plans, and 83% of large firms opting for self-funding [25][21]. Statutory Financial Results (2018-2023) - The average covered lives increased from 56.9 million in 2018 to 61.1 million in 2023, with a 5-year average growth rate of 1.4% [4]. - Total premiums rose from $19.974 billion in 2018 to $35.066 billion in 2023, with an average annual growth rate of 11.9% [4][19]. - Premiums per member per month (PMPM) increased from $29.24 in 2018 to $47.86 in 2023, reflecting a 10.4% average annual growth rate [4][11]. Market Trends - The medical stop loss market is projected to grow by 7.5% to 8% in the upcoming year, driven by rising healthcare costs, particularly hospital expenses [21]. - Enrollment in the fully insured group medical market has declined by over 15% in the past five years, indicating a shift towards self-funding [4][22]. - Large claims, particularly those exceeding $1 million, have increased significantly, with a notable rise in claims attributed to cancer treatments and complex conditions [34][35]. High Dollar Claims Trends - Claims exceeding $2 million have increased by 55% from 2018 to 2022, with claims over $5 million seeing a 292% increase during the same period [34][35]. - The frequency of claims at higher thresholds continues to rise, with significant increases in claims related to transplants and cancer treatments [34][35]. Carrier Rankings and Market Share - The top 15 carriers represent almost 80% of the total stop loss market, with the largest carriers being CIGNA, UnitedHealth, and CVS Health (Aetna) [18][19]. - UnitedHealth experienced the largest relative growth in premiums among the top carriers, with a growth rate of 22.2% from 2018 to 2023 [19][18]. Advanced Analytics Applications - Advanced analytics are being utilized to identify areas for profit improvement and optimize growth within stop loss portfolios [4]. - The GC Mosaic Predictive portfolio model and Oliver Wyman's Health Data & Analytics team are focusing on large claims to identify individuals at risk [4].