Dive Brief:
- Two insurance industry executives have launched a new company, Reinsurance Direct, that will enable employers who self insure their medical benefit plans to purchase stop loss insurance directly from the source.
- Reinsurance Direct, founded by former Munich Re Stop Loss executives Paul Fallisi and Susan Bowman, is the insurance industry’s first entity to exclusively sell stop loss coverage directly to self-insured employers.
- Employer stop loss is used to protect companies that self-insure their employee health benefit plan against infrequent, but highly expensive catastrophic medical claims.
Dive Insight:
By marketing directly to employers, Reinsurance Direct bypasses the middleman – typically insurance brokers – and eliminates commissions, fees and overrides. The result is an insurance model with lower costs and savings that Reinsurance Direct passes along to employers. Typical savings are 12-16%, although savings could be as high as 30% in extreme examples.
“Employer stop loss insurance is really a commodity. And while many factors such as contract provisions and customer service go into the decision of purchasing stop loss insurance, the most important factor is price,” said Fallisi, CEO.
Most Americans with employer-provided insurance are in self-funded plans. According to the Kaiser Family Foundation, about 91% of people in employers with 5,000 or more workers were in self-insured plans in 2014, compared with 15% of people in employers with fewer than 200 workers. As little as 15 years ago, only 62% of workers in companies with 5,000 or more employees were in self-insured plans.
