Houston, TX, July 9, 2025 – Tokio Marine HCC – Accident & Health (A&H) Group, a leading specialty insurance provider, has released its 2025 Annual Market Report, highlighting a dramatic increase in high-cost stop loss claims impacting employer-sponsored health plans in the United States. The report, published on July 8, 2025, underscores the growing challenges for businesses offering competitive healthcare benefits amid rising claim frequency and severity, driven by factors such as advanced medical treatments and post-pandemic hospital financial recovery efforts.

Key Findings from the Report

The report reveals a significant shift in the medical stop loss landscape, with large claims becoming more frequent and costly:

• Exponential Claim Growth: Stop loss claims exceeding $2 million have surged by 1,251% since the Affordable Care Act (ACA) removed caps on health benefit payments in January 2014. Claims above $1 million are now commonplace, no longer considered rare or catastrophic.
• Rising Claim Frequency: The percentage increase in claim frequency is notable across all large claim thresholds, with Tokio Marine HCC reporting significant growth in claims per insured.
• Cost Drivers: High-cost claims are increasingly tied to treatments like organ transplants, premature births, cancer care, and emerging cell and gene therapies. For example, transplant claims have more than doubled over the past seven years, prompting Tokio Marine HCC to partner with networks like LifeTrac, Optum Healthcare, and Mayo Clinic to secure preferred rates and manage costs.
• Market Hardening: Hospitals, seeking to recover from pandemic-related financial losses, are contributing to higher claim costs, leading to increased stop loss premiums and stricter underwriting terms.

Jay Ritchie, President & CEO of Tokio Marine HCC – A&H Group, commented, “As one of the largest carriers in the Stop Loss market, we found 2024 to be a year of significant change. The rising frequency of claims, particularly as hospitals seek to recover financially from the pandemic, have been contributing to a hardening market. Insurers are responding with higher rates and stricter terms all while the industry adapts to new AI capabilities.”

Tokio Marine HCC’s Stop Loss Solutions

Tokio Marine HCC – Stop Loss Group, operating through HCC Life Insurance Company, provides medical stop loss insurance to over 3,500 self-funded employers and union plans, as well as organ transplant coverage for 1,000 groups. Its offerings are designed to protect employers from the financial impact of catastrophic claims:

• Specific Stop Loss: Covers individual claims above a specific deductible, with standard maximum limits of $1 million, and options up to $10 million. Claims bases include 12/12, 12/15, 12/18, 15/12, and 24/12.
• Aggregate Stop Loss: Protects against total claims exceeding a predetermined threshold, ensuring budget stability.
• Level Funded Stop Loss: A hybrid product for employers transitioning from fully insured to self-funded plans, offering fixed monthly budgets, transparency, and 100% recoupment of unused claims funds.
• Captive Stop Loss: Allows employers to share risk through a captive, insulating them from claim volatility. Premiums are pooled, and any surplus at the end of the treaty year is distributed as profit.
• MedPlus Group Supplemental Health Insurance: Complements primary medical plans by covering deductibles and out-of-pocket expenses, reducing costs for employees and employers. Available for groups as small as five employees.

The company’s Preliminary Claim Unit (PCU) and Specialty Claim Unit (SCU) work to mitigate costs through early notification and partnerships with payors and case managers. The PCU identifies high-cost claims early, exploring repricing options for treatments like dialysis and chemotherapy, while the SCU collaborates with preferred vendors to contain expenses.

Industry Context and Implications

The surge in high-cost claims reflects broader trends in healthcare, including the adoption of expensive treatments like cell and gene therapies, which Tokio Marine HCC addresses through specialized coverage. The company’s acquisition of Gulf Guaranty Employee Benefit Services in 2023, which added the MedPlus product generating $60 million in annual premiums, has strengthened its position in the health insurance market.

The report also notes the role of AI in transforming the stop loss market, with Tokio Marine HCC integrating new capabilities to enhance underwriting and claims processing. Ritchie emphasized the company’s commitment to “strong underwriting discipline” and maintaining relationships to deliver quality service while adapting to technological advancements.

Strategic Response for Employers

Employers with self-funded health plans face increasing financial pressure from high-cost claims. Tokio Marine HCC’s solutions provide flexibility and cost containment, enabling businesses to offer competitive benefits while managing risks. The company’s financial strength—rated A+ (Strong) by S&P Global Ratings, A++ (Superior) by A.M. Best, and AA- (Very Strong) by Fitch—ensures reliability for policyholders.

For employers, the key is early engagement with stop loss providers. Tokio Marine HCC’s partnerships with leading transplant networks and its focus on cost-saving measures, like repricing out-of-network claims, help mitigate the impact of large claims. Employers are encouraged to work with brokers, consultants, or third-party administrators to tailor coverage to their needs.

Conclusion

The sharp rise in high-cost stop loss claims underscores the evolving challenges in employer-sponsored health plans. Tokio Marine HCC’s 2025 Annual Market Report highlights the need for robust risk management strategies, offering a suite of products to protect employers from financial volatility. As claim frequencies and costs continue to climb, the company’s innovative solutions and strategic partnerships position it as a leader in addressing these challenges. For more details, visit tmhcc.com or contact the Stop Loss Group at stoploss@tmhcc.com.