Stop-loss is leaving one-size-fits-all behind
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Customization, consultation, and AI are redefining what employers should expect from stop-loss
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Historically, many employers persisted in buying coverage like a box-ticking exercise – just accepting standard terms at renewal and discovering the gaps only when a catastrophic claim arrived. Nowadays, however, this is quickly changing.
The stop-loss insurance market is big business – and it’s only set to get even bigger. According to Oliver Wyman’s report, stop-loss carrier premiums reached $39 billion in 2024 – reflecting an impressive growth rate of 11.2 percent from 2019, and the pace isn’t slowing.
In a recent interview with Insurance Business, Arleigh Kennedy, chief underwriting officer, accident & health at Skyward Insurance, revealed that the market is seeing
Skyward Specialty (Nasdaq: SKWD), a Skyward Group company, is a rapidly growing and innovative specialty insurance company, delivering commercial property and casualty products and solutions on a non-admitted and admitted basis. The company operates through nine underwriting divisions – Accident & Health, Global Agriculture, Captives, Energy Solutions, Global Property, Professional Lines, Specialty Programs, Credit & Surety, and Transactional E&S.
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“Firms are starting to realize that going fully insured is like pressing the easy button, but it’s not necessarily saving them money”
Arleigh Kennedy,
Skyward Insurance
Published Jul 27, 2026
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“I’ve worked for different carriers, and I’ve run the gamut in this space… and at Skyward we really take the time to understand these vendor partnerships”
Arleigh Kennedy,
Skyward Insurance
something of a shift away from archaic, fully insured plans in the SME space and a growing interest in what stop-loss customization can offer.
“The biggest driver of this shift, especially considering the escalation of costs, is that a lot of these mid-sized companies are already at their maximum [budget]. They mainly look at their max cost, and, in a fully insured model, you’re leaving money on the table there.”
With so much focus on containing budgets, organizations are now looking at what fully insured plans lack in comparison to customized ones. And the gaps are startling.
“Firms are starting to realize that going fully insured is like pressing the easy button, but it’s not necessarily saving them money,” added Kennedy.
As Kennedy told IB, a lot of these fully insured plans are slightly bundled in their approach, especially where pharmacy benefit managers (PBMs) are concerned.
“There’s so much markup on those drugs. [As such], these groups are seeing that they could save hundreds of thousands of dollars by making that change – but they simply can’t do it in a fully insured environment. These conversations are starting to help people see the real dollar savings that could be retained for their plans.”
Formerly, Kennedy told IB, there was a prevalent narrative that you be classed at a certain level before you could self-fund, but that’s quickly changing. And while level-funded products, for a long time, acted as a gateway to self-funding, there’s even a margin in that.
“They usually retain, if there are savings, some of that [money],” added Kennedy. “So even though those level-funded products are a gateway, they’re not really getting you to the full value you’d save if you moved to self-funding. There needs to be an awakening with the brokers here. They have to realize that they need to start recommending that their groups look at this [seriously].”
The issue has drawn so much media attention that even Mark Cuban has commented on the problem. In a recent post on X, Cuban blasted the health insurance industry’s structure, instead advocating for a specifically designed bank account model that would include stop-loss coverage.
He wrote online: “What if there was a bank account available, that required you to deposit monthly, what you would have paid an insurance company in premiums, for an ACA silver plan. So for a family of 5 about $2100. The amount would then be used for Stop Loss Insurance set at $30k dollars. About
$300. Another $200 would be used for local Direct Primary Care for your family.
“If you have a medical event that is more than what you have saved, your bank will loan you the money you need to pay for it, up to the $30k stop loss trigger. You would repay that amount using the monthly $1600 net deposit. Once the loan is paid off, the deposits start to accrue to you again. This is not insurance. It’s a specially designed bank account that gives you control, support, a doctor to work with and catastrophic financial protection.”
Customization, consultation: ‘that’s been huge for us’ At Skyward, they position themselves as very much anti-one-size-fits-all programs, instead opting to build coverage around each employer’s underlying plan. It’s this customization process that allows for more niche, specialized programs that ultimately reduce coverage gaps – and it’s really highlighting just where “off-the-shelf” products fall short.
“When a broker is bringing in a new client for the customization process, the first thing they need to look at is picking the right third-party administrator (TPA) partner,” added Kennedy. “They have to have a very aggressive TPA partner that’s [actively] looking at the vendor stacks they’re putting together. The broker should also look for the right stop-loss carrier – there has to be a [strong] partnership between the broker, the TPA, and the stop-loss carrier to build out these plans.”
At Skyward, they do this a little differently from the industry norm. Kennedy and her team take the time to review their vendors, drilling down into what the savings are – and from there the underwriting team uses this data to take a logical approach to determining what the vendor solution is really going to bring to the table.
“That’s been huge for us,” said Kennedy. “That’s where we see the savings, and we price to those partnerships. In my career, I’ve worked for different carriers, and I’ve run the gamut in this space – and more than anywhere else I’ve worked, at Skyward we really take the time to understand these vendor partnerships.”
This consultative approach to underwriting caused Skyward's overwhelming success in recent years. As Kennedy told IB, it also boasts a “very strong clinical team” with nurses who actively get involved in the process too.
“We do a lot of vetting,” she said. “The RBP space and the direct-contracting space have really blown up recently – and
that’s where we’re seeing the most impact. At Skyward, we take the time to evaluate them – we prefer to actually go to the network to get their information and then use our own internal pricing models to be able to drive that. Our book of business really reflects that.”
For smaller groups, where claims data is inevitably slightly thinner and where a single catastrophic event can have a hugely outsized impact, the approach takes a different turn – one that’s been perfected over years of practice.
“In the past, there was nothing we could do,” Kennedy told IB. “These groups are coming off fully insured, but they’re still almost handcuffed by those fully insured carriers because… they won’t give you the data. In my past experience, we would just have to pass on those groups. We didn’t have a solution – but nowadays the development of AI is helping.”
Skyward’s AI platform is called Sky Vantage, and it’s used to uncover any hidden red flags.
“We don’t price off a manual,” Kennedy revealed. “Some folks will just take a manual rate, inflate it, and try to give them a number. We use AI to dig [deeper] to look and see if we can find potential ongoing claims that could be an issue. Sometimes the AI suggests that the group should actually stay fully insured because there’s too much risk for them to self-fund. But again, for us, it all comes back to that consultative approach.”
While AI is playing an important role at Skyward, the technology is no substitute for the human touch. While her team uses AI for speeding up processes, Kennedy is emphatic that people still play a starring role.
“We’ve had some great success in developing internal tools that use AI to drill down through information to grab and identify claims. That’s been super successful. However, you can’t just take that information [at face value]. After AI, a human underwriter will look at the [suggestion] and evaluate the risk. AI may help us find the risk faster, but there still has to be a person involved.”
‘We’ve started to push the envelope back on some of these carriers’ Again, with Skyward, all systems and processes revert to their core value: consultation. And it’s the very same with AI. As Kennedy told IB, AI can never be used blindly – there always needs to be a person on the other end ensuring that the output fits.
“With AI, you can’t see a red flag and just jump to the worst-case scenario,” she explained. “Say, for example, we have experience but it’s limited – we’ll still run AI against it and sometimes it doesn’t match up. Sometimes there’s something flagged by AI that we don’t see, so we can’t identify the risk. For instance, perhaps people are being moved on to some type of a Samaritan fund, or they’re being moved on to a manufacturer’s assistance program that still flags in AI – but it’s not reflected in the experience because it’s not hitting the plan. [Essentially], you’re not going to get a correct answer unless a human looks into it further.”
Looking ahead to what the future holds for the stop-loss insurance market, brokers who want to stay ahead of the curve need to start “unbundling.”
“In the past, carriers would sometimes pay claims with very limited information. A way that brokers are going to get ahead of this is, first, to understand that we can’t continue to just pay claims on limited information.
“At Skyward, we’ve started to push the envelope back on some of these carriers. In the last year, we have identified issues with eligibility, with coordination of benefits, and with subrogation claims that should have never been charged to the plan. On one claim we saved almost $6 million because the person was not even eligible. It never should have hit the plan – it was a simple eligibility mess.
“[To see real change], it’s going to take a lot of folks having that focus to say, ‘This isn't going to work anymore.’ You can’t just push the easy button and give them a fully insured rate anymore.”
‘A captive isn’t a dishwasher’ Aside from coverage concerns, Skyward is looking closely at captives this year, with Kennedy predicting that in the next three to five years, there will be a big explosion in those mid-sized groups dealing with medical stop-loss captives.
“Sometimes brokers enter into [this space], hear the word ‘captive,’ and [assume] everything will ‘clean up.’ A captive isn’t a dishwasher. You still have to work with the right captive partners to make sure they’re putting in all the [correct elements] – the right vendor stacks, the right networks. In that type of solution, if you get into a captive, like-minded employers doing the right things can definitely save money here too.”
Again, Kennedy stressed that even the best captive arrangement will deliver results only if it’s supported by the right partners and a willingness to challenge the status quo. Ultimately, she believes the industry’s biggest hurdle isn’t the structure itself but a long-standing mindset around what stop-loss carriers should actually be doing.
“A lot of brokers, for a long time, have looked at stop-loss as just a mechanism to pay their claims,” she told IB. “They didn’t like that we started to push back on things – so if your carrier is just telling you, ‘We’re big enough, we’ll just pay your claims,’ they’re not doing you any service by that. And unless they align with consultative and proactive carriers, brokers won’t see the results that their plans are going to demand.”
The best digital experiences are defined by what doesn’t go wrong
Move to self-funded plans
Automated validation catches errors before paperwork is resubmitted
Strong platforms simplify complexity into answers clients actually need
Source: Oliver Wyman, KFF 2025 survey
Million-dollar-plus claims rose 46% in frequency 2022–2026
The million-dollar-claim problem
Blood cancers produced the highest multimillion-dollar claims, averaging $5.45M in 2025, with a single leukemia claim near $8M
Segal recorded a 9.4% average stop-loss premium increase in 2024 – 11.5% for employers keeping comparable coverage – and found that fewer than 0.2% of claimants had claims over $250,000, yet those claims accounted for 14% of all medical plan expenses
Source: SunLife, SegalWeb Page
