PLAN FOCUS
Impact on fully insured & self-funded employer health plans
Fully insured, self-funded, & stop loss insights
With loss ratios under strain and renewals increasing, long-term and innovative strategies are essential.
Watch Lockton experts break down the changing fully insured risk pool and high renewals, where self-funded employers are looking for savings and cost control, and how stop loss carriers are adjusting for employers and members.
High renewal increases for fully insured plans
Carriers are navigating market volatility, shifting state and federal regulations, the specialty medication pipeline, biosimilars, and a continued focus on GLP-1s and future approvals. These pressures are driving high renewal rates for fully insured groups, and carriers are building in extra margin for risk loads and profit while adjusting their manual rating.
While healthcare trend continues to rise, smaller groups can see even higher increases that aren’t tied to their own claims experience. These renewals also reflect broader carrier adjustments driven by market-wide patterns and cost pressures, often tied to industry or region.
Is a move to self-funding right for your plan?
3%-5%
Lockton actuaries estimate the cost savings for switching from fully insured to self-funded can be 3%-5%.
In this environment, fully insured groups will explore self-funding to gain greater flexibility in plan design, leverage good claims experience, and find savings due to not having to pay insurance premiums, associated taxes, and other claims costs.
However, there are other cash flow and administrative considerations in a self-funded plan that employers need to contemplate.
Self-funding & stop loss environment
Self-funded plan sponsors should take advantage of bold moves The impact of high-cost claimants and cost pains is also reshaping the self-funded market. And these claims don’t just affect the current plan year; they hit the stop loss policy and can influence premiums and terms in future years.
As a result, cost containment strategies are no longer optional; they’re essential, and more self-funded employers are interested in evaluating ways to cut costs. Employers should carefully review alternative approaches and risk strategies, including narrow or high-performance networks, products that use plan design to steer members, and more disruptive options, such as ICHRAs and reference-based pricing.
Stop loss market pressure On the stop loss side, carriers are also navigating broader market pressure and large claims. Stop loss premium loss ratios continue to trend upward year over year, and many carriers are projecting additional rate increases and tighter terms continuing through 2026 and beyond.
