State of the Stop-Loss Market

The medical stop loss market remains under pressure from worsening loss ratios, higher-cost claims, and elevated utilization.  Stop loss carriers are anticipating persistent pressure through 2027  and are targeting 27%-30% rate increases.
 
Lockton suggests employers should move beyond treating stop-loss as an annual insurance purchase and instead adopt a more strategic approach that includes earlier planning, stronger data management, optimized risk retention, evaluation of alternative funding vehicles, and proactive management of high-cost medical and pharmacy claims.
 

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Based on Lockton People Solutions' June 2026 stop-loss market update and our Alternative Risk Playbook, employers should consider the following actions:

1. Start the Stop-Loss Renewal Process Earlier
   • Carriers are requesting more detailed and current claims data, and underwriting decisions are being made later in the renewal cycle. Employers should begin budgeting, risk-transfer discussions, and renewal strategy meetings earlier to avoid last-minute decisions and maintain negotiating leverage.
2. Reevaluate Specific Deductible Levels and Risk Structure
   • Given the significant increase in claim severity driven by specialty pharmacy, oncology, and gene therapies, employers should evaluate whether higher specific deductibles, aggregating specific deductibles, or strategic use of lasers can improve the balance between premium costs and retained risk. 
3. Improve Claims Data Quality and Reporting Readiness
   • Successful stop-loss underwriting increasingly depends on clean, timely, and complete medical and pharmacy claims data. Employers should strengthen internal reporting processes and work closely with TPAs, PBMs, and consultants to ensure data can be produced quickly for underwriting review.
4. Explore Alternative Risk Financing Solutions
   • Captives, consortiums, purchasing groups, and hybrid risk-sharing arrangements are gaining traction as employers seek greater stability and transparency amid volatile stop-loss renewals. These alternative funding approaches can help smooth year-to-year fluctuations while providing more control over long-term healthcare risk financing.
5. Address High-Cost Claim Drivers Proactively
   • Employers should focus on managing catastrophic claim risks, particularly specialty pharmacy, cell and gene therapies, and oncology treatments. Effective pharmacy management, clinical oversight, and large-claimant monitoring can help reduce stop-loss volatility and improve renewal outcomes.

Reach out to [email protected] for more information about evaluating alternative risk solutions for your business