Earnings impacted
Cigna, a major stop-loss insurer, reported lower-than-expected earnings last month and attributed the drop in higher health care expenses to its stop-loss business. The company said it would aggressively raise the prices of those plans to make back lost profits.
Executives from Voya Financial told securities analysts this month that the company is getting tougher with employers that use stop-loss insurance to protect their self-insured health plans. Its ratio of benefits payments to premium revenue soared to 115% in the fourth quarter of 2024, from 76% in the fourth quarter of 2023. The company had expected to report a loss ratio of 86%.
Sun Life Financial’s US operations reported a surge in extremely expensive claims that caused stop-loss insurance benefits costs to spike in the fourth quarter. Sun Life’s president, Dan Fishbein, blamed the surge in big claims on three factors: a rise in the number of more advanced cancer cases and the high cost of cancer drugs; a lack of normal preventive screening during the COVID-19 pandemic years, a surprising rise in the overall US birth rate – with more parents relying on in vitro fertilization and other expensive fertility tools; and increases in hospital care prices.
Fishbein said the company would increase renewal prices by 14% and cut ties with some plans with exceedingly high claims.
Analysts say those insurance company stumbles reflect an industry-wide trend in which insurers increasingly are paying for a lot more unexpected, big-ticket health care procedures.
And the trend may continue. The Insurance Collaboration to Save Lives, a nonprofit organization that analyzes life insurance claims and encourages insurers to screen, test, and triage members to reduce excess mortality and morbidity, has identified what it said were five troubling trends affecting the nation’s health.