From: Captive International
In recent years, captives have gone from being just one of several options in companies’ risk management arsenals to being viewed as strategically important tools whose value is seen across organisations, says Mike Serricchio of Marsh’s Captive Solutions Group
As captives have made that leap, they have increasingly been used to manage nontraditional risks, including those covering their employees—for many businesses, their most important asset.
In addition to writing employee benefits via their captive insurers, employers are increasingly using their captives to secure medical stop-loss insurance, through which they can protect against potential catastrophic medical expenses.
Growing medical expenses
The pandemic has put a spotlight on the health and wellbeing of employees—and the associated costs for employers. But the growth in stop-loss premiums has not been driven by COVID-19 specifically, but rather by the long-term rise in the potential frequency and severity of catastrophic medical claims since passage of the Affordable Care Act (ACA) a decade ago.
Many of the ACA’s provisions took effect in 2014, including the elimination of lifetime limits in employee-sponsored group health programmes—good for individuals, but not for businesses, which lost a powerful means for controlling costs.