In a recent article in The Self-Insurer, Captive Resources’ President of Health Solutions, Steve Gransbury, offered insight on the advantages of Medical Stop Loss group captives for employers. Below is an excerpt from the article:
As organizations increasingly turn to captives for their insurance needs, more and more are using them for medical stop-loss coverage for employee health insurance.
“This is the fastest growing segment within employer-sponsored, self-funded health plans,” said Gransbury. “It creates a shared layer of risk for the captive participants to manage claim volatility.”
A group captive for self-funded employer health plans is a mechanism for the captive participants “to manage volatility and protect against the severity of risk,” he said. “We’re seeing employer-sponsored health insurance plans from all areas of industry.”
In its Captive Trends and Insights report of 2023, Marsh noted that of its captives, traditional property-casualty coverages lead in growth, with 42% for property and casualty, 25% for commercial life, and 20% for employee benefits – with 37% of those formed for medical stop-loss, and 13% for financial and other lines.
Every industry has claims of all sizes, and they all have health plans Gransbury noted. With a captive they can “open themselves up to the right partnerships to be able to manage and control costs.”
The article also highlights an interview with a member of one of the Medical Stop Loss group captives we support at Captive Resources. Below is an excerpt from the interview:
“Like many organizations, our healthcare premiums were much like a roulette table, we weren’t sure what the percentage was going to be,” said Jon White, Vice President of Shared Services at Stansell Electric, a third-generation contractor with about 300 employees. “If you got a single-digit increase, you were supposed to celebrate that.”
One year, they had a 32% rate increase, “which didn’t seem right,” he said. The next year, “We ran under a 70% loss ratio, and they gave us a rate pass. I said I wanted a rate reduction, and they said, ‘We don’t ever do those.’” From a cost standpoint, “It was out of control,” White said, adding that this made it difficult to take care of their employees.
In early 2019, they met with Joe Parrilli, Senior Vice President of Medical Stop-Loss at Captive Resources. “He had designed a captive that was a fit for our type of organization, so we joined in the fall of 2019, and we’re now in our fifth year,” White said.
