Stop Loss Renewal Season 2026: Challenged & Confused

Employers are navigating the most challenging stop loss renewal season in decades. We’re sharing what we’re seeing in the market, why it’s happening and what we recommend you could do to address it.

This isn’t just a tough year. It’s a convergence of market disruptions and a shifting carrier landscape. The result? A storm of complexity and confusion that will continue.

Is The Market Hardening or Confused? Maybe you’re hearing the term “hardening market” tossed around and depending on your circumstances, that may or may not be what’s happening. After spending time with the largest carrier CEOs over the past few weeks, the consensus is clear: the market is confused.

​Here’s why:

• 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.

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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.

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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.

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Reduce Reimbursement Lag
Oftentimes, delayed reimbursements have a significant adverse effect on cash flow.  Innovative financial services speeds stop loss reimbursements to help cash flow, offering greater predictability and standardization​. The frequency of $1M+ claims has increased 1,250% since 2013, We’ve seen paid claims as high as $26M. Imagine the impact to cash flow with this scenario? Speeding the reimbursement process has benefits such as  

• Employers can receive funding within 24-72 hours.
• Unlimited advance funding without dollar limit or timing restrictions.
• A carved-in outcome while still benefiting from 3rd party carrier experience.​

We’ll continue to share updates as the renewal season progresses including market conditions, renewal performance, and anything else that helps you stay ahead of the curve.

If you’re feeling the pressure, you’re not alone. Lockton's model brings purchasing strength combined with open market access (no panels), transparency, clinical support and administrative simplicity, and may be different from your current consulting structure,  We’re here if you’d like to discuss the 2026 market or how Lockton might be helpful navigating these changes.
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