Part 4: Underwriting practices—is the policy renewal-friendly?
In this series, we examined our evolving stop loss market, contract quality and claims service. In addition to these critical details, it’s important to ask potential stop loss carriers about their underwriting practices before signing a contract.
Some things to consider:
- Stop loss is an annually renewable policy and we see a wide range of renewal underwriting practices. If a customer’s loss ratio exceeds established tolerance levels (known as the “target loss ratio”), some carriers will set renewal pricing based solely on the customer’s unique experience. Other carriers may partially “pool” the needed increase by applying it across their national block of business. Carriers with smaller blocks of business and MGU’s are more likely to set renewal pricing based on individual case performance.
- If your carrier partner has rigid underwriting practices and forces clients into difficult maximum liability scenarios for the renewal period, finding a suitable replacement carrier could be challenging. If, for example, a participant has a known condition requiring a prescription that runs $70,000 per month, some carriers will build expected claims in excess of the deductible directly into the renewal premium.
- Does the carrier require a signed disclosure form at policy renewal?
- Does the carrier reserve the right to "laser" plan participants at renewal or increase existing lasers at renewal? (A “laser” is a deductible level higher than the individual stop loss case levels.)
- Does the carrier offer a renewal rate cap? This option might come into play if claims experience has been adverse, or if there are ongoing significant claim liabilities in the new policy year for which the carrier may need to rate.
When you’re evaluating carrier options, take time to review their renewal policies so there are no surprises in the future.
We hope you enjoyed this four part series and gained some insight into things to consider when choosing a stop loss carrier. If you have any questions, or want to learn how Symetra’s stop loss policy stacks up, please contact your Symetra stop loss representative.