Organisations are being driven towards medical stop-loss captives as a response to the traditional market failing to evolve and adapt, explained panellists at this week’s Captive Insurance Companies Association (CICA) International Conference.
Describing the status quo of the traditional market, Renee Bosley, senior vice president of employee benefits at EPIC Insurance Brokers & Consultants, noted that the majority of clients turn to captives as an alternative solution to address ever-increasing rates in the commercial insurance market.
Vanessa Andersen, human resources director at Rummel Construction and member-owner of group captive Well Health Insurance, added that the traditional market does not demonstrate why claim costs are as high as they are.
Therefore, examining trends around the growth of medical stop-loss captives should be framed around why the traditional market is failing to evolve, rather than what is changing to make group captives more attractive.
In allowing for a direct contract with pharmacy benefit managers and third-party administrators, medical stop-loss captives significantly reduce administrative costs.
Joe Parrilli, senior vice president of Captive Resources, noted another primary advantage of medical stop-loss captives is control, whether stabilising total healthcare spend, ensuring flexibility when creating a customised health plan, or selecting which vendors to work with.
In addition, the control of a member-owned and directed captive allows for transparency in risk sharing, investment income and total captive performance, as well as promoting collaboration and innovative idea sharing, noted Parrilli.
Andersen concluded the panel session by highlighting the crucial role of a broker; in addition to consulting and compliance, it is essential for a captive to have a good relationship with the broker as they can help to educate the workforce on the advantages inherent in a group captive.
