At Resolute Underwriting Strategies, we use a two factor approach to determine the ideal minimum/maximum specific stop loss level for an individual group. First, we look at the size of the group. Second, we look at the mature, expected claim level. We feel this approach will yield a minimum/maximum specific stop loss level that is not too high nor too low. To use Goldilocks’ terms, “Just Right”. The grid below shows the factors we use to determine the minimum/maximum stop loss level for an individual group.
Specific Deductible as a % of Expected Paid Claims
|# of Employees||Minimum||Maximum|
Here’s an actual example from a recent group we quoted.
Enrolled Lives 75
Mature Expected Claims $727,276
Minimum Specific Level $25,000
Maximum Specific Level $85,000
The above levels are recommendations that a new group to self-funding can use to help choose their specific stop loss level. These levels can also be used for an existing self-funded group to determine if it’s time for a change in the specific stop loss level especially for one that has gotten larger due to growth or acquisitions. The above chart is specific to Resolute Underwriting Strategies although most stop loss insurers or MGUs will have similar guidelines to help a group determine their specific stop loss level.