Employer medical stop-loss captives are reinforcing their value as a long-term solution for financing catastrophic risk in self-funded health plans, according to a new report from Amwins Benefits. The finding appears in Amwins Benefits' inaugural State of the Market report, published under the division's recent rebrand. The report concludes that medical stop-loss captives are expected to remain a viable long-term strategy for small to mid-size employers, citing continued interest in group captive arrangements as employers look to leverage economies of scale, avoid volatility and mitigate risk. The findings come against a backdrop of significant pressure in the underlying stop-loss market. Amwins reports that stop-loss premium has risen 250% since 2016 and is projected to reach US$113.5 billion by 2034, growing at a 15% compound annual growth rate. Carrier loss ratios climbed from 80.4% to 85.8% between 2023 and 2024, the highest level in at least eight years, and three established carriers have exited the stop-loss market in recent months. High-dollar claims are a key driver. One stop-loss carrier cited in the report saw a 60% spike in claims exceeding US$1 million per million covered employees between 2021 and 2024, while another reports a 1,250% increase in claims exceeding the specific deductible by US$2 million or more since 2013. Amwins highlights that effective group captive programmes combine plan-level risk mitigation and cost containment with programme-level oversight to maintain alignment across participating employers. It adds that the willingness of third-party administrators to integrate with cost-containment vendors is a critical factor for group health plans operating within a captive arrangement. The report also flags broader market shifts, including carrier exits from the small group fully insured space and a growing focus on captives among insurers reallocating capacity away from that segment. Amwins Benefits places more than US$11.7 billion in annual premium across its platform and covers more than 10.7 million lives. The full report is available here.
