Since 2019, our integrated approach to Complex Claim Management, Medical Consulting & Stop-Loss Brokerage has resulted in

• $456M of verified claims expense reductions
• $186,000 average claim reduction per case 

and in 2024, 

• $80.4M of verified claims expense reductions
• 17,630 member cases reviewed

and more than $100M in 2025 so far...

CLICK BELOW to learn more about how our Complex Claim Management practice improves care and saves money  

• Loss Ratios Are Surging

Industry-wide stop loss premium now exceeds $40B, and loss ratios are up to 85%—well above the historical target of 75%, which itself is 10–15% higher than a decade ago. Carrier leaders are calling this “unsustainable,” and many expect a 3–5 year correction cycle. Carriers are reinsuring themselves at a higher rate than prior years signaling their concerns with risk, volatility and rising cost.

•  Capacity Is Up, But So Is Pressure

More capacity is creating a bookend effect. Employers with favorable experience are still seeing rate passes or decreases. On the flip side, employers with poorly performing experience are getting hit hard—resulting in as much as 300% year-over-year increase and initial renewals hitting rate caps.

• It May Not Be Textbook, But It Feels Hard

The textbook definition of a hard market are premium increases coupled with decreases in capacity and available terms. While it’s encouraging that capacity is growing, if you’re getting a steep rate increase or losing favorable terms, it feels hard…very hard.

What Does This Mean for Employers?

• Average Rate Increases Are Rising
  Carriers are targeting 22–29% increases across their blocks for 2026, up from 17–22% last year. For comparison, Lockton clients purchased at an average 12% across our $2B+ block last year. As a result, clients who hadn’t felt the pressure to take on more risk, so deductibles remained lower than market norms. To offset proposed increases, clients are reviewing deductibles using tools such as Monte Carlo to determine acceptable risk / cost levels.
• Renewal Timelines Are Compressed
  Carriers waited for September data to make underwriting decisions, which pushed the renewal timeline back by a full month over prior years’ experience. That’s putting pressure on our clients and consulting teams. Nine months of data (through September for January renewals) is now the norm, with very few exceptions. Early lock offers (before the 90-day mark) are now seeing premium loads of 7–12% because claims haven’t fully materialized. The delay in renewal and alternative proposals is a clear reflection of broader market uncertainty.

Other Trends We’re Tracking

• Fewer Rate Cap / No New Laser contracts are being made available.
• Claim denials are increasing, likely driving up E&O exposure.
• Carrier performance metrics are tightening underwriting behavior.
• Providers are using AI in managing complex cases and driving claims costs.
• Reimbursements are taking considerably longer creating cash flow burdens for plan sponsors​.

How Can Employers Navigate This Market?
We recommend several strategic solutions to help employers navigate the increasingly complex and costly stop loss renewal environment for 2026 and on a go forward basis.

Start the process earlier in 2026 We have seen a delay in renewals and proposals as carriers waited for September claims to firm up / finalize their proposals. Leverage reporting from your broker, consultants and carriers to start these conversations early in 2026 and create an ongoing cadence throughout the year. While the early lock options (if available) may carry premium loads, these options should be on the table along with those listed below.

​Increase Deductibles Strategically
Using data and actuarial tools, raising deductibles to manage premium costs and absorb manageable risk is a proven approach. Monte Carlo risk analysis helps clients determine the appropriate deductible level given risk tolerance, claims utilization, predictive analytics and other factors. In fact, deductibles are being increased at nearly twice the rate this year as compared to 2024. For example, one client had maintained a $200,000 specific deductible for 7 years. By raising the deductible to $350,000, they were able to save 40% in stop-loss premium and receive better terms. This trend is expected to continue as employers seek to balance cost containment with coverage.

Monitor and Track Claims
Using technology to track claims through not only financial benchmarks but clinical triggers that flag claims for review. Reporting and tracking on reviewed claims will reveal common issues such as

• Site of care alternatives
• Potential coding errors
• Aberrant pharmacy utilization

Major issues are generally infrequent but significant dollars are involved when identified. In addition, this reporting can project future costs as well as support more accurate underwriting and strengthens the employer’s position during renewal negotiations.

Use Predictive Modeling and Data Analytics
Leverage both internal and external resources for:

• Predictive modeling
• Historical large claimant analysis
• Premium benchmarking

This allows for earlier evaluation of renewal ratings and supports more informed negotiations with carriers.

Consider Alternative Risk Strategies
To mitigate the impact of high-cost claims, we are seeing increased adoption of:

• Captives: Risk transfer mechanisms that redirect underwriting surplus back in-house.
• Aggregating Specific Deductibles: This strategy helps protect against unexpected costs by accumulating claims across covered individuals rather than focusing on a single high-cost claimant.

​Press for Forward-Looking Underwriting
Given the rise of emerging treatments (e.g., gene therapies, orphan drugs), we emphasize the importance of underwriting models that account for future risk, not just historical claims data. This is especially critical as many high-cost therapies enter the market before they appear in claims history.

Use Clinical Team Support
Clinical teams (including MD and RN support) help evaluate high-cost claimant liability as well as assist with complex and unique clinical inquiries such as

• Support when needed during an appeal or denial process
• Consultation around the efficacy of emerging treatments
• Advice regarding protocols for cost management programs

Click here to Success Stories from Lockton's Clinical Teams 

​Streamline Premium Billing Procedures
Proof of eligibility, especially for COBRA and LOA, is under tighter review—leading to reimbursement delays stricter claims adjudication, and increased claims denial.  Streamlining processes for billing and collecting stop loss premiums for all third-party stop loss carriers​ provides benefits such as

• Timely premium payments to reduce claim denials or delays.
• Lower costs by having carriers quote premiums net of commissions and service fees, which may reduce premium taxes and overhead.
• Enhanced client experience through a payment portal offering real-time premium calculations, reminders, and secure ACH payments.

As employers are planning their 2026 benefits strategy, managing costs has overtaken attracting and retaining talent as the most important factor in decision making. 

Over the past several years, plan sponsors have faced a global pandemic, rising healthcare costs, economic uncertainty, shifting employee expectations and now rising tariffs / trade wars. While "attracting and retaining talent" has long been a key priority, the 2025 Lockton National Benefits Survey highlights a notable shift: "reducing costs" has now become the top factor in benefits decision-making.
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Despite this shift, many plan sponsors have not yet taken significant steps to lower costs. While some are beginning to optimize their plans, most are prioritizing cost-management strategies that minimize disruption rather than implementing more impactful changes. The challenge lies in balancing the need to reduce costs with the pressure to meet employees’ expectations for benefits — plan sponsors remain cautious about changes that could disrupt their workforce or be seen as not meeting members’ perceived needs. Continuing to delay meaningful action, however, could make it more difficult to achieve cost savings, ultimately leading to tougher decisions down the line.

All of this is happening amid a growing spotlight on plan sponsors to meet their fiduciary responsibilities in managing benefits plans. As with retirement plans, employers have an opportunity to educate themselves on their fiduciary duties and take proactive steps to document how they are fulfilling these obligations.

Password for accessing the survey is Locktonbenefits2025

Snow, sleet, freezing rain made the drive up 89 from Boston to Hanover longer and more stressful than I’d planned. Make a plan and God laughs. The effort, however, was worth it for it was another great Tuck PEVC Conference.  Lockton was once again a sponsor. Bobby Steinsdorfer D’07 and I were in attendance as well as Mach Millett, our Alternative Investment Leader and CINO. Mach participated on the “Nuts & Bolts – The Broader Private Equity Ecosystem” panel.

The event kicked off with dinner at The Inn which included a fireside chat Marni Payne D’98, Managing Director at Berkshire Group and Professor Josh Lewis, Executive Advisor for Tuck CPEVC. Marni is focused on the consumer market in which it is hard to gain share of voice and share of eyeballs due to the fickleness of the changing consumer. They covered a wide swath of topics including fads vs. trends, best days and worst days in PE and what makes Berkshire Group different. I appreciated her discussion of alignment with the founder / management team as the formula for growth, scale and success. The business is not about “the chase” but focused on “the marriage”.

Pine at the Hanover Inn was busy after dinner, and I decided it was best for this 88 to hit the rack. It was a good decision as I was able to get in a 7.5 hike around campus before the event kicked off on Friday. Campus was quiet and beautiful with a fresh coat of snow. The Building & Grounds crew was clearing the ice at Occum Pond for some Winter Carnival skating and a handful of houses on Webster Ave. were forming the foundations of snow sculptures.

The day started with another fireside chat with Jeffrey Crisan D’95 and Jamie Havran T’25, Conference Co-Chair, & PE/VC Fellow. Once again, a wide range of topics was covered. Healthcare was the first discussed. Jeff feels that States as opposed to the Feds will be focusing on healthcare regulation over next 4 years. Mental health is an area of focus in healthcare fueled by HITECH, ACA, Mental Health Parity Act and demand accelerated through the pandemic. In technology, it’s best to think of the long-term benefits – think internet, SAS and now AI. He gave a wonderful illustration of evolving the podiatry business model into one that provides integrated care management to diabetes patients.

I attended several panels and a highlight was Energy & Climate featuring Jeph Shaw T’15, Sara Simonds T’03, James Socas, and Dave Russ - moderated by Jordan Swett, T’25. Some of the issues that resonated with me are

• Wind and solar are growing rapidly (90% cost reduction in solar)
• Most investments are going to red states (Texas is biggest renewable state)
• Family offices are looking for climate investments from a social lens
• Capital markets aren’t working efficiently for innovation investments like climate

Alas, I had Zoom call that ended my day at Tuck in the early afternoon. I did grab dinner at Murphy’s with some fellow Alums and then watched the Big Green beat Harvard in Men’s Hockey. All in all, a very successful day at Dartmouth.
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Other Key Takeaways:

𝗦𝗲𝗰𝗼𝗻𝗱𝗮𝗿𝘆 𝗠𝗮𝗿𝗸𝗲𝘁 𝗚𝗿𝗼𝘄𝘁𝗵 - liquidity solutions are expanding, and LPs are leveraging the secondary market more strategically than ever.

𝗡𝗼 𝗧𝗼𝗹𝗲𝗿𝗮𝗻𝗰𝗲 𝗳𝗼𝗿 𝗗𝗼𝘄𝗻𝘀𝗶𝗱𝗲 𝗥𝗶𝘀𝗸 - with higher interest rates and economic uncertainty, firms are laser-focused on resilient deal structures and downside protection.

𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗥𝗮𝗶𝘀𝗶𝗻𝗴 𝗖𝗵𝗮𝗹𝗹𝗲𝗻𝗴𝗲𝘀 - differentiation is critical. Breaking through the noise in an era of information overload takes more than just a strong track record.

𝗣𝗼𝘀𝘁-𝗖𝗹𝗼𝘀𝗲 𝗩𝗮𝗹𝘂𝗲 𝗖𝗿𝗲𝗮𝘁𝗶𝗼𝗻 - the focus continues to shift from financial engineering to operational excellence, making real impact at the portfolio level.

𝗧𝗵𝗲 𝗣𝗼𝘄𝗲𝗿 𝗼𝗳 𝗦𝗮𝘆𝗶𝗻𝗴 𝗡𝗼 - disciplined investing isn't just about where capital is deployed; it's also about the deals and ideas that don't make the cut. Knowing when to pass is just as important as knowing when to commit.
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Several Tuck students looking at careers in PE or VC asked me “Smitty, how does insurance fit in with Private Equity and Venture Capital?” In short, our business help clients through fund level insurance, transactional liability and insurance due diligence. Given firms’ exposure to a variety of risks across different industries, specialized insurance products are needed both at the fund level and the portfolio company level. Risk appetite and approach to insurance depend on factors like firm culture, past relationships, deal structures, leverage, and exit strategies – to name a few. So here’s a primer on the topic and where Lockton works.

A. Fund-Level Insurance Needs (Protecting the Firm & Executives)

• General Partner Liability Insurance (GP Liability): Protects the firm and its executives from lawsuits related to fund management, breaches of fiduciary duty, and investor disputes. Some firms are facing increased scrutiny from LPs and regulators.
• Directors & Officers (D&O) Insurance: Covers the firm’s executives against claims from LPs, regulators, or other stakeholders. LPs may demand this coverage before committing capital.
• Professional Indemnity (Errors & Omissions) Insurance: Protects against lawsuits arising from claims of mismanagement, negligence, or failure in investment strategies. LPs may also require this type of coverage.
• Reps & Warranties (R&W) Insurance: Used in M&A deals to cover breaches of reps and warranties made by sellers, reducing escrow requirements. Sometimes R&W allows deals to close faster and with less negotiation over escrows and indemnities.
• Cyber Liability Insurance: Protects against data breaches and cyberattacks affecting sensitive deal-related information. Firms handle sensitive financial and personal data, making them prime cyberattack targets.

B. Portfolio Company Insurance Needs (Protecting Acquired Businesses)

• Property & Casualty (P&C) Insurance: Covers physical assets, business interruption, and general liability. Some lenders and investors require P&C coverage as part of financing agreements.
• Management Liability (D&O, EPLI, Fiduciary): Covers executives of portfolio companies against lawsuits related to governance and employment practices.  These protections are becoming increasingly essential for retaining and attracting top executive talent.
• Cyber & Data Breach Insurance: Protects against financial, reputational and operational risks of cyberattacks. Data breaches are costly and operationally disruptive. Many portcos operate in sectors with sensitive data (e.g., healthcare, fintech).
• Workers’ Compensation & Employee Benefits Liability: Ensures compliance and protection against people-related risks. Workers’ Comp and Benefits (ACA) are not only legally required coverages but can assist in increasing productivity as well as talent attraction and retention.
• Trade Credit & Political Risk Insurance: Helps mitigate risks in global operations, especially in emerging markets. Important for global expansion and risk mitigation in emerging markets.

• Transactional Risk Insurance (e.g., Tax Liability, Contingent Liability) Covers unexpected tax assessments or legal liabilities discovered post-acquisition. Helps firms avoid costly surprises after closing deals.

C. Why Some Firms Look To Avoid Insurance

• Cost Considerations (“It costs too much”): Some firms may view insurance premiums as an unnecessary expense, preferring to self-insure. Your broker should be well versed in your business to market possible coverages to help you determine whether the protection is worth the cost. Also, self-insuring can be more expensive in the long run. Reps & Warranties insurance, for example, can reduce escrow needs and improve capital efficiency.
• Risk Tolerance (“We just don’t see the risk”): Some firms, usually those with well-diversified portfolios, may prefer retaining risk rather than paying for coverage. While it was Teddy Roosevelt that said, “Comparison is the thief of joy”, we have plenty of case studies of recent lawsuits, regulatory fines, or unexpected claims affecting firms that may help firms better see the risks.
• Alternative Risk Transfer Mechanisms: Firms may use captive insurance companies or structured finance solutions instead of traditional insurance. We have lots of expertise and dedicated teams to help assess whether a captive makes sense and then how to implement and operationalize the strategy.

Insurance, done properly, is an efficient use of capital and delivers ROI.
Insurance can a tool to unlock capital, facilitate exits, and reduce deal risks. Well-structured insurance programs make portfolio companies more attractive at exit.
Your broker should understand the specific risks of your portfolio industries (e.g., healthcare, manufacturing, tech) and offer customized solutions.

​The 2024 Lockton National Benefits Survey features responses from 1,611 employers across the U.S. The employers represent a variety of industries, group sizes and ownership structures. Their responses reflect their different philosophies on how to attract and retain talent while managing the cost of their health and welfare benefits. 

Here is the Insights Report

A class action lawsuit was just filed against drug manufacturer Johnson & Johnson (J&J) in its capacity as an employer and plan sponsor.

The suit alleges that J&J breached its fiduciary duties by not taking proper measures to ensure its plan costs were reasonable as well as failing to exercise prudence in selecting its pharmacy benefit manager (PBM) and agreeing to undesirable contract terms. Specifically, the suit accuses J&J of mismanaging its employees’ drug benefits, resulting in employees significantly overpaying for certain drugs. 
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This lawsuit is an example of the recent uptick in impending lawsuits regarding compliance with recent transparency rules, reinforcing the need for ERISA fiduciary governance.

To help navigate these responsibilities, Lockton held webcast that walked through the key steps of proper fiduciary governance for employers. Click here for a replay of the webcast

​We have also created a Fiduciary Governance Toolkit to help ensure clients are well-versed on and are meeting their fiduciary duties. The Lockton Fiduciary Governance Toolkit includes:

• A roadmap for establishing a health and welfare plan committee to formalize plan decision-making.
• A checklist of key plan administrative functions that welfare benefit plan fiduciaries are responsible for managing.
• Sample policies to address common and uncommon situations.
• Sample welfare plan governance committee minutes to illustrate how to document prudent fiduciary processes to avoid big headaches later.

If you have questions or would like to speak with one of Lockton's Compliance attorneys, please reach out at [email protected] or 617-840-4515

On February 15th, NEEBC orchestrated the region's first-ever employer focused Oncology Symposium, hosted at the Dana-Farber Cancer Institute in their Jimmy Fund Auditorium. The sold out event provided employers actionable insights to promote early detection and treatment, reduce oncology costs and how to best support employees, families and caregivers on their cancer journeys.

Leading experts discussed how organizations navigate the complex world of oncology care and focus on the ever-evolving world of oncology benefits:

• New innovations in cancer prevention and early detection
• How concordant care leads to better outcomes
• The impact of social determinants of health on cancer treatments and follow up care
• How to design a benefit plan to drive maximum value and managing costs 

​As cancer rates continue to rise, it’s important to remember that employees are increasingly concerned about cancer. This event was a learning opportunity for employers to increase understanding so that they can make a difference in cancer care for their workforce. 

Some of the survey feedback on the event was:

• “Took away both long-term goals and ideas, as well as immediate, actionable items.”
• “One of my top 3 NEEBC events ever!”
• “Important topic done within an excellent session.”
• “This was fantastic!”
• “Great speakers and moderators.”
• “Eye opening!”
• “The balance, variety of perspectives, and ‘art & science’ of it all was just wonderful.”
• “Excellent storytelling throughout.”
• “Extremely informative for employers on how to support employees’ needs and challenges.”
• “I literally didn’t want to leave.”

Some key takeaways for the Symposium are

The Critical Importance of Early Detection in Cancer Treatment
The discussion underscored the stark difference in survivability rates between early and late-stage cancer diagnoses, highlighting colon cancer as a case study where Stage 1 survival rates are at 91%, compared to only 13-14% for Stage 4. The panel noted that currently, only four types of cancers have approved and reliable screenings (colon, breast, cervical, and lung), leaving a significant gap as 72% of cancers do not have early detection tests. Further discussion centered on emerging technologies, like DNA-based blood and urine tests, that aim to fill this gap, offering hope for early detection across more types of cancer. The discussion around the FDA's breakthrough designation for Grail and the focus on high specificity to reduce false positives in testing are part of the efforts to improve early detection.

The February sun was shining, temperatures in the mid-forties as I arrived at the Hanover Inn. Back in town for the 2024 Tuck Center for Private Equity and Venture Capital Conference. My midday arrival allowed me to take a few laps around Occum Pond and the campus. Sadly, most of the snow had melted and the prospects for Carnival ice sculptures were dim. I’m sure the students were ready to revel in their long winter weekend. I know I did “back in the day”.
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