Though the dust is not close to settled at this point, the effects of COVID-19 on the stop loss market have been mixed thus far. According to Greg Wilden, Senior Vice President of Sales for HM Insurance Group, while persistency – the measure of premium retained year over year – has increased, new business is declining.
This was expected, he says, because of the many unknowns that still remain.
“New business-wise, the reality is that companies are not going to move carriers, whether it be stop loss carriers or the company’s claims payer for their group health plan, in the middle of this chaos,” says Wilden.
With a focus on markets ranging from 100 to 3,000 lives and a deductible range of $75,000 to $500,000, HM Insurance Group admits it likes to target “Blue” and Commercial TPA groups.
Wilden is bullish on the stop loss market. His company has seen a steady increase in business opportunities driven in large part by widening employer interest in self-funding, due mainly to the escalating costs associated with fully insured health care plans.
Says Wilden, “Self-funding is now being looked at by all employers – all sizes, all demographics.”
And that’s because employers of all sizes want to achieve better financial control over their health plans, while also increasing flexibility and business oversight.
“Health care expenses are huge,” Wilden notes. “There’s a cash flow advantage to being self-funded – and flexibility with the plan. Self-funded companies get to work their financials differently than those with a fully insured plan.”
The current global pandemic had hospitals put a halt to elective surgeries, causing a hit to the bottom line of hospitals and doctors. During this time, there has been a drop in claims to stop loss carriers and first-dollar coverage.
“From a stop loss perspective, this decrease in claims also has decreased the complications that come out of these surgeries,” he explains.
In addition, as of July 1, HM Insurance Group has had minimal COVID-19 claims across its book of business.
“COVID-19, itself, is not a high-dollar claim,” says Wilden, who indicates it’s likely patients’ pre-existing conditions that call for additional and costly treatment.
Though the year will likely close with strong results for the stop loss market, as a whole, the impact of COVID-19 on the stop loss market, businesses, the unemployment rate and the government’s infusion of cash into the economy are still unknown. Smart reinsurers like HM Insurance Group know disciplined management is key to driving results in the most challenging of times.
“The reality is, as a reinsurer, we are very stable and financially strong,” says Wilden. “We are ahead in all of our operating goals. What are going to be challenging years are 2021 and 2022.”