Advisors left to clear up coverage confusion

by Nicolas Heffernan16 Mar 2015
Advisors are increasingly caught between angry clients and carriers unable or unwilling to explain a variance in premiums for stop-loss coverage.

Usually a study in similarities, stop loss premiums are all over the map.

Insurer prices are generally a study in similarities, but advisors are seeing startling differences in stop loss premiums between carriers.

“We’re actually seeing quite substantial differences between what one insurance company is willing to offer as a premium for stop loss at a certain level for a group compared to another,” said Mike Sullivan, president of Cubic Health. “We had never seen to that degree before in the past.”

The explosion of high-cost drugs is really driving the experience now. “So as a result some plans are getting hit really, really hard, and some of their stop loss is getting hit hard, so you’re seeing some really interesting variation that you didn’t use to see in the past,” said Sullivan. “For example, Company A might be offering a premium of X per cent for the stop loss and somebody else might be two times higher or in some cases it’s even three times higher than that.”

The variation is there even within an individual insurer’s offerings. “We’ve even seen numbers within a given carrier where they’re might be different premiums depending, of course, on what a group’s experience looks like,” said Sullivan.

And it can come down to luck of the draw.

“If you’re unlucky as an employer and you have someone in your plan, or someone’s spouse has a condition that requires these drugs then it’s going to have an impact on your overall plan and it filters out through your stop loss,” said Wayne Farrow, president and CEO of Benefits Alliance Group.

All of which leads to a tremendous amount of uncertainty going forward.

“There really doesn’t seem to be one specific way to calculate anymore,” said Sullivan. “There are a lot of outside forces that are dictating how much it’s costing and what they’re willing to offer from a premium perspective. It’s making it difficult to predict where it’s going to go in the future.”