Prudential enters medical stop-loss market for self-funded plans
The insurer, once a major player in medical insurance, is going in as some carriers are complaining about high claim costs.
Prudential Financial is entering the U.S. stop-loss insurance market as some other insurers are wishing they hadn’t.
Stop-loss insurance protects employers with self-funded employee benefit plans against catastrophic losses.
The new Prudential program will be open to employers with a minimum of 100 employees. The program will offer stop-loss insurance for prescription drug claims, dental claims, vision claims and short-term disability claims, as well as for medical insurance claims.
Jessica Gillespie, an executive who has been with Prudential since 2006, is the head of Prudential group insurance product and underwriting.
Prudential was once a major provider of medical insurance. The Newark, New Jersey-based company sold its medical insurance business to Aetna in 1998, at a time when federal and state health insurance laws and regulations were in flux.
Since then, the company has faced the same questions about the best path forward as other life, health and annuity issuers, with interest rate volatility hitting its annuity operations hard and COVID-19 hitting its life insurance operations.
Prudential sold a retirement recordkeeping business with 4 million participants to Empower Retirement in 2021.
Volatility related to COVID-19 and the high cost of drugs for conditions such as cancer have buffeted the stop-loss market, and insurers have responded by raising prices.
Stop-loss premiums for plans with a $500,000 individual annual stop-loss deductible increased at about 13% per year between 2022 and 2024, to an average of $46.30 per covered employee per month, according to a survey of 1,137 plan sponsors with 1.1 million employees that was organized by Aegis Risk and cosponsored by the International Society of Certified Employee Benefit Specialists.
Dan Fishbein, president of Sun Life Financial’s Sun Life U.S. unit, said in August, during a conference call with securities analysts, that some competitors in the stop-loss market appeared to be unhappy with their results.
Related: Sun Life sees U.S. medical stop-loss market stabilizing
Fishbein suggested that some of those players may have charged too little for their stop-loss coverage.