In Defense of Carriers

It is not easy being a stop-loss carrier. They are usually ignored when it comes to the care of the patient and what expensive treatment plans are put in place. They are often just expected shut up and pay.

Even though ideally the employer or plan sponsor should view the stop-loss carrier as its partner so that each one is considering the needs of the other, that is all too often not the case. For the best and most humane stop-loss carriers, the quality of their work and contract has been ignored as too often the rating of the quality of the carrier has devolved down to how its numbers look on a spreadsheet.  To shop the coverage each year aggressively on price is often seen as a badge of honor by the plan or its consultant.

Specialty drugs are increasing in costs at an alarming rate, with new expensive “blockbuster” drugs added to the pipeline all the time. A Sun Life report from 2017 noted that they had seven claims in 2013 with million dollar drug costs but by 2016 that number increased to 23—a 228% increase in just three years. Thus, in an insurance world where stop-loss insurance is seen as a commodity and costs are rising, margins become thinner and there is not a lot of incentive for carriers to go above and beyond the minimum.

Commodities are akin to vanilla ice cream. It is hard to claim that one vanilla is demonstrably better than another vanilla, but we argue that Gibraltar plans are like chocolate. Buyers will seek them out because they are perceived as being different and superior. Luxury automobile companies have shown that buyers will pay for higher value, but these auto makers could not exist if they had to be sold on a spreadsheet that listed only tires and brakes and did not show what makes the automobile special and better.