Medical stop loss
captives on the rise
“The out of control costs to health insurance is one of the main
drivers. The increase in pharmacy costs within their individual spend
continues to go up. Groups are always looking for ways to gain control
of that cost,” Parrilli says.
Employers looking at which programme structure best suits their
size and risk appetite have a number of options available to them,
including single parent captives (where they have complete control
over the programme); group captives (suitable for employers with
smaller populations); and protected cells (for groups wanting to use
an existing captive facility rather than form their own).
Single parent captives
While single parent captives have typically covered property and
casualty risks of their parent companies, many of them continue to
seriously consider healthcare, whether that be through employee
benefits or medical stop loss, according to Michael Serricchio, Americas
sales leader and managing director in Marsh’s captive advisory group.
“The reason we are seeing the increase is that mature captives
are no longer looking just at property/casualty, they’re expanding
their philosophy to other stakeholders within the organisation.
Against a backdrop of rising costs
in the commercial health insurance
market, companies across the US
are increasingly looking to self-fund
their employee health insurance
plans through medical stop loss
captives. US Captive fi nds out how
much the sector is growing.
Medical stop loss captives are quickly becoming the
go-to solution for employers looking to take control of
their healthcare spend. Funding medical stop loss in a
captive allows employers who self-fund their benefit plan to add
a layer of protection from excessively high individual or aggregate
One of the key drivers in the growth of this space has been the
rising costs associated with providing healthcare coverage.
According to the Centers for Medicare & Medicaid Services’
National Health Expenditure Projections 2017–2026, US national
health expenditure is expected to increase by 5.3 percent in 2018.
The government agency says drivers of this include the increased
prices of healthcare goods and services.
Joe Parrilli, vice president at captive insurance adviser Captive
Resources, says a number of factors contribute to the increases in
the cost of health insurance, including the cost of drugs, the cost
of care, and an aging workforce—all of which, he says, are driving
growth in the medical stop loss market.
14 US Captive 20168 www.captiveinternational.com